• Olive Resource Capital achieved portfolio highs in November 2025 through disciplined gold position management, trimming exposure during September's peak whilst maintaining strategic core holdings, then adding positions during October's volatility and into November's recovery period.
• The oil-to-gold ratio currently sits at 20% of its 25-year historical average, providing extraordinary validation of gold's relative strength and pricing power whilst simultaneously identifying severe undervaluation in energy markets that creates complementary investment opportunities.
• Coordinated global liquidity expansion through deficit spending by the United States, China, Canada, and European governments creates optimal conditions for hard asset appreciation, with gold benefiting directly from currency debasement whilst maintaining its role as sovereign reserve diversification.
• China's aggressive crude oil stockpiling of 700,000 barrels daily mirrors its documented 2022-2025 gold accumulation strategy, demonstrating how nations tactically acquire discounted hard assets for strategic reserves whilst maintaining permanent monetary diversification through gold holdings.
• Professional resource investors maintain gold as permanent portfolio foundation whilst exploring cyclical opportunities across the commodity complex, recognising that gold's unique monetary properties, portfolio insurance characteristics, and systematic sensitivity to liquidity conditions justify strategic allocation distinct from tactical commodity positions.

Gold's Performance Context: A Rising Tide

Olive Resource Capital's November results provide instructive context for gold's market position. Derek McPherson, Executive Chairman, and Samuel Pelaez, President and CEO of Olive Resource Capital, outlined how their diversified resource approach delivered results by recognising value across commodity cycles. Their November success came partly from strategic gold position management – trimming into September's highs whilst maintaining core exposure, then adding back positions during October's weakness. This disciplined approach to gold allocation exemplifies why the yellow metal remains foundational to sophisticated resource investing, even as opportunities emerge elsewhere.

"The portfolio is at the highest it's been for the year and consequently for since we've taken over this vehicle," Pelaez confirmed.

This performance came despite October representing "the worst seasonal month for commodities and related equities" with the highest volatility across the global investment spectrum.

Gold's contribution to this recovery proves significant. The team's tactical approach demonstrated professional position management:

"With gold's big run we trimmed into September into that high, got our timing pretty right and didn't exit but trimmed – there's a big difference there – and then in October and into November we've actually been adding positions," McPherson explained.

This positioning reflected confidence in gold's fundamental trajectory whilst recognising cyclical volatility. The approach contrasts sharply with emotional trading, instead treating gold as a core strategic holding worthy of active management around a stable position.

The Gold-Oil Ratio: An Extraordinary Signal

Perhaps the most compelling gold validation emerged from Pelaez's commodity ratio analysis. When examining major commodities priced in gold terms, he discovered oil and coal trading at historic discounts.

"The cheapest commodities, major commodities that you can find today when priced in gold terms – are oil and coal. Both of which, if you follow the ratio, there's about a 400% return. So they're trading at 20% of their average value in gold terms for the last 25 years."

This extraordinary ratio provides dual insights. First, it confirms oil's severe undervaluation – the primary thesis driving Olive's emerging energy allocation. Second, and equally important, it validates gold's relative strength and pricing power in today's market environment. Whilst acknowledging political constraints on oil prices reaching such extremes, the ratio nonetheless signals fundamental commodity market dislocation with gold demonstrably outperforming.

Macro Liquidity: The Rising Tide for Hard Assets

The discussion's macro framework provides crucial context for gold's continued relevance. The observation captures the essential monetary environment favouring gold, as McPherson articulated the liquidity dynamics supporting hard asset valuations:

"There's a bit been a recession coming for a couple of years now that we all been waiting for that we seem to print – we seem to be debt finance our way through by large governments."

"The debt financing, the liquidity that is coming into the market via government entities, the massive amounts of liquidity. China with trillion US dollars, forget about the fact that they're stockpiling, they're also stimulating their economy. The US is spending money like it's going out of style. Canadian government spending money is going out of style. European governments are all deficit spending. There is no shortage of spending to protect the economy."

This liquidity framework applies equally to gold. The monetary environment described – persistent deficit spending, competitive currency debasement, and coordinated stimulus – represents precisely the conditions under which gold has historically thrived. When governments collectively prioritise economic stability over fiscal discipline, hard monetary assets benefit.

Strategic Stockpiling: Following China's Playbook

The team's analysis of Chinese crude oil stockpiling provides instructive parallels to recent gold market dynamics.

"China is aggressively buying oil beyond their refining needs and their domestic consumption, i.e. they are stashing away substantial amounts of crude as we speak, reminiscent of what they were doing with gold last year and the year before," Pelaez observed.

This comparison proves revealing. China's documented gold accumulation over 2022-2025 contributed significantly to gold's rally from $1,800 to over $4,000 per ounce. The People's Bank of China announced consecutive months of gold reserve increases, signalling strategic diversification away from dollar-denominated assets.

Now China applies similar logic to crude oil, building strategic reserves at depressed prices. The implication for gold remains clear: nations recognise the strategic value of accumulating hard assets during periods of relative weakness, with gold having already experienced this dynamic whilst oil represents the current opportunity.

Portfolio Construction: Gold's Foundational Role

Olive Resource Capital's approach demonstrates gold's ongoing importance within diversified resource portfolios. Despite identifying compelling value in oil equities, the firm maintains significant gold exposure accumulated through disciplined buying during weakness.

McPherson explained regarding their October-November activity,

"We've actually been adding positions and effectively reducing our cash balance and deploying the little bit of cash that we had raised on a portfolio basis."

This deployment included selective gold equity additions alongside exploratory oil positions. The firm's structure as "a broad resource portfolio" enables flexibility across commodity cycles, yet gold remains foundational. Their tactical gold trading – trimming at highs, adding at lows – occurs around a strategic core position rather than representing wholesale rotation.

This approach recognises gold's unique characteristics: liquidity during market stress, portfolio insurance properties, and sensitivity to monetary conditions. Whilst cyclical opportunities in energy or base metals may offer superior near-term returns, gold provides stability and systematic appreciation within the broader commodity complex.

Valuation Discipline: Applying Gold Market Lessons

The team's valuation framework for oil equities offers instructive parallels to gold investing. Pelaez emphasised buying quality at cyclical lows:

"Had you bought Agnico Eagle 10 years ago when gold was on its knees you would have been up 20 or 30 times on your investment and that would have been buying the best in-class equity."

This reference to Agnico Eagle Mining's performance from 2015-2025 demonstrates the power of acquiring premier assets during sector pessimism. Agnico traded below $30 in early 2016 when gold languished near $1,050; today it trades above $90. Investors who recognised quality and value during peak negativity captured extraordinary returns.

"I think the opportunity that we have in oil today is similar. You don't have to go and dig through the rubble to find the most obscure micro caps to get the exposure to this swing trade as it recovers. I think we are in front of an opportunity where you can buy top of class best management best run companies and you still stand an opportunity to make multiples on your money."

For gold investors, the message remains relevant. Whilst gold equities have outperformed significantly since 2018, quality senior producers continue offering leverage to further gold price appreciation without excessive operational risk. The principle of favouring premier assets during periods of uncertainty applies whether the commodity is gold, copper, or crude oil.

Complementary Opportunities

Olive Resource Capital's exploration of oil equities does not diminish gold's importance but rather demonstrates how sophisticated resource investors deploy capital across the commodity complex. McPherson noted considering themselves a "broad resource portfolio", explaining their historical focus on traditional hard rock mining whilst maintaining flexibility for opportunities elsewhere.

This diversified approach acknowledges that different commodities offer compelling value at different cycle points. Gold's strong 2024-2025 performance created opportunities for profit-taking and redeployment, whilst maintaining strategic exposure. Meanwhile, oil's weakness presents contrarian entry points for incremental portfolio positions.

Importantly, the macro factors supporting both remain aligned. Pelaez expects aggressive fiscal stimulus:

"China and the US next year in my forecast, they're going to go very aggressive on stimulus. We may see a very good year next year and I don't think that's on the cards for almost anyone that I talk to."

Such stimulus supports both energy demand and hard monetary assets. Increased liquidity benefits gold through currency debasement whilst supporting economic activity that drives commodity consumption. The trades complement rather than compete.

The Investment Thesis for Gold

• Core Strategic Allocation: Gold should serve as a permanent portfolio foundation with tactical position sizing adjustments around a stable core, rather than binary entry/exit decisions that treat it as merely another cyclical commodity play.
• Relative Value Validation: The oil-to-gold ratio currently trading at 20% of its 25-year historical average provides quantitative validation of gold's exceptional relative strength and pricing power within the broader commodity complex.
• Monetary Environment Positioning: Persistent global liquidity expansion through coordinated deficit spending across the United States, China, Canada, and European nations creates the precise conditions under which gold has historically delivered superior returns as governments prioritise economic stability over fiscal discipline.
• Quality-Focused Implementation: Investors should prioritise senior gold producers with strong balance sheets, sustainable cash flow generation, and shareholder-friendly capital allocation policies, applying the same valuation discipline that identifies compelling opportunities in other commodity sectors at cyclical lows.
• Sovereign Accumulation Following: China's documented strategic reserve building in gold during 2022-2025 (contributing to gold's rally from $1,800 to over $4,000 per ounce) followed by similar aggressive crude oil stockpiling demonstrates how nations recognise the strategic value of accumulating hard assets during periods of relative weakness.
• Active Position Management: Professional investors should manage gold exposure through disciplined profit-taking during strength (trimming at highs) and strategic accumulation during consolidation (adding at lows), whilst maintaining core exposure that provides portfolio insurance properties and liquidity during market stress.
• Complementary Diversification: Gold's strategic role enables investors to explore tactical opportunities in other undervalued commodities (such as current oil equity valuations) without abandoning the monetary metal foundation that provides stability and systematic appreciation regardless of specific economic outcomes.

Macro Thematic Analysis: The Liquidity Tide and Hard Asset Repricing

The monetary environment described by Olive Resource Capital's leadership represents a fundamental reshaping of commodity market dynamics. With global governments engaged in coordinated deficit spending to sustain economic stability, traditional valuation frameworks require recalibration. The United States, China, Canada, and European nations simultaneously pursue expansionary fiscal policies, creating unprecedented peacetime liquidity expansion. This environment historically favours tangible assets over financial claims, as currency debasement through debt monetisation erodes purchasing power of fixed-income instruments whilst enhancing relative value of commodities with finite supply.

Gold's outperformance relative to oil – manifested in the 25-year low in the oil-to-gold ratio – reflects investor recognition of these dynamics. Whilst oil remains tethered to economic growth expectations and geopolitical supply management, gold responds directly to monetary conditions and sovereign reserve diversification. China's shift from gold accumulation to crude oil stockpiling suggests tactical opportunism rather than strategic pivot: acquiring discounted oil for immediate strategic reserve whilst maintaining gold as permanent monetary diversification.

The convergence of bearish commodity sentiment with accommodative monetary policy creates asymmetric opportunities across the resource complex. Drawing on macroeconomic analysis, McPherson restated:

"Nothing stops this train – there is tons of liquidity coming and so your hard assets which oil is one of are going to be economic at least economic stability if not economic growth and so then these assets should in principle increase."

This liquidity surge supports both cyclical commodities through demand stimulation and monetary metals through currency debasement, creating conditions for broad-based hard asset appreciation regardless of specific economic outcomes.

TL;DR

Olive Resource Capital's November 2025 portfolio review reveals gold's continued strategic importance despite compelling contrarian opportunities in oil equities. The oil-to-gold ratio trading at 20% of its 25-year average validates gold's exceptional relative strength whilst macro conditions—coordinated deficit spending, persistent liquidity expansion, and sovereign reserve diversification—create optimal hard asset appreciation dynamics. Professional investors maintain gold as permanent portfolio foundation through disciplined position management (trimming strength, adding weakness) whilst exploring tactical opportunities in undervalued commodity sectors. China's shift from gold accumulation (contributing to $1,800 up to the $4,000 rally) to aggressive crude oil stockpiling demonstrates sovereign recognition of strategic hard asset acquisition during relative weakness. Key insight: gold's role transcends cyclical trading, serving as monetary insurance whilst other commodities rotate through relative value cycles.

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