- Gwen Preston of Resource Maven says “Gold can be a good bet in a growth or recession scenario”
- Preston explains ways to add gold exposure in your portfolio
- The protected downside of gold in a growth or recession period
- “Gold performs better when rates are falling,” Preston says
Mining expert Gwen Preston, publisher of Resource Maven joins The Market Herald’s Wiser Wealth to share her thoughts on having gold in your portfolio and the outlook on gold for the remainder of 2023. Preston owns Resource Maven, an independent perspective on investment opportunities in the mining sector. The publication presents a focus on junior companies that explore for new discoveries and build new mines.
We sat down with Gwen early in July to get her thoughts on the rest of the 2023.
Gold exposure in your portfolio
TMH: Gwen, give us your gold picks.
Gwen Preston: I always struggle a bit to give general stock thoughts because everybody’s portfolio is their own portfolio, and it depends on your level of engagement with your portfolio.
And you look at the stocks, how long or short term your parameters are. But I do think that gold makes a lot of sense in the next little while because as we discussed, I think the downside is pretty protected. I think whether we end up in a growth scenario or we end up in a recession scenario, gold should do well in both of those cases.
So if that makes sense to you, then I would encourage you to get some gold exposure in your portfolio. It could be gold, the metal, it could be low-risk gold miners through an ETF. So then you’re diversifying cross-mining companies, even if one has a bit of a disaster. You’re diversifying across mining companies.
So a gold miner’s ETF absolutely works. If you want to lean in, I think that there’s gonna be some pretty exciting upside for the smaller gold companies, the ones that are making new discoveries or advancing discoveries, turning them into mines. But that requires a fair bit of knowledge. So I think it’s well supported.
I will throw in there that I also think base metals are well supported once we decide which of these paths that we’re on, either growth or recession, which should hopefully then lead to growth. The base metals won’t go until we’re in a growth environment. But once we do, the fundamentals for base metals are very, very strong.
And the demand for new metals is hard to wrap your head around. So I think there is opportunity in both with slightly different time frames.
Gold outlook for the rest of 2023
TMH: And what is your outlook for the remainder of 2023?
Preston: You know, that’s tough to say. I think that, so we just had a few days before this conversation, we just had the Federal Reserve skip a rate hike and keep rates even.
And then we will see what they do in July. And so this is sort of the big question and I think anyone who thinks or speaks about financial stuff is so sick of talking about interest rates. Like we’re just sick of it. But it remains the thing that really matters, right? Because everybody is just hanging off of “Will conditions continue to tighten?”
And if they do that keeps the clamp down on stocks to some extent, but they’re still performing. Gold does better when rates are falling. The next real surge for gold is likely when rates are clearly done rising and we are not yet there. I don’t know when we will get there.
I can argue myself forwards and backwards about that every day of the week. So gold’s really exciting upside will happen when we know that rates are done rising, and especially if they start to be cut for whatever reason, whether that’s because we’re in a growth environment, but inflation has come down.
Or it’s because we’re in a recession; we’re not there yet. So I think gold might be a little bit boring for the rest of the year. But we do have that really consistent central bank buying, they just keep buying gold. So I think that keeps it very well supported. So, I think it’s a bit of an opportunity for people to consider the space and enter, take their time to enter before the more exciting upside shows up.
Gold ETFs in Canada
Here are some examples of gold exchange traded funds (ETFs) in Canada:
- Sprott Physical Gold Trust (TSX:PHYS)
- Ishares Gold Bullion EFT (TSX:GBAL)
- Purpose Gold Bullion Fund (TSX:KILO)
For more of this interview, check out The Market Herald’s Thematica Gold Report.
On Friday, gold was trading at just over US$1,906 an ounce.
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