- The economy’s sought-after soft landing and its impact on gold
- The gold unicorn: Inflation comes down and growth remains good
- In a confident growth scenario, metals go on a bull market run and gold participates in a metals bull market.
- Gold is well supported either as part of a broad metals bull market or because investors buy it in a recession
Welcome to Wiser Wealth. The Market Herald’s Coreena Robertson sits down with mining expert Gwen Preston. Preston is a speaker and educator and is here to share her insight on gold as a bear or bull market.
A unicorn in sight, so what happens with gold?
TMH: Preston speaks at several investor mining events, including the Vancouver Resource Investment Conference and the Investors Forum. As one of her topics, she discusses gold as a bear market. Gwen, what can we expect? A gold bear or bull market?
Gwen Preston: So I like to make sure that I’m paying attention to what could happen. I’m not just assuming that gold is going to go up. I have to pay attention to what one of the options on the table is when I look ahead at the macroeconomic landscape; what are the possibilities as well? One of them is the sought-after soft landing, which I think is a bit like a unicorn.
But the unicorn might actually be in sight right now, and that unicorn is inflation comes down, but growth remains good. So that’s a bit unicorn. But that actually is the situation that we’re in right now and it might persist in that situation.
We have no recession. We have inflation that comes under control and real and rates can come down probably not tomorrow, but they can come down maybe in 2024. We get some nice rate cuts and things come down. What would gold do in that situation?
Well, there’s no huge driver for gold in that situation, in that we don’t have a recession that draws investors to gold. But what we do have is central banks continuing to buy it because that’s a large geopolitical story that is not going away.
That’s all about globalization and East-West splits and all of that de-dollarization. So we still have central banks buying gold, which supports the price of gold, and we probably have a broad metals bull market. There’s a huge shortage of copper and nickel and lithium and zinc and silver, too, for growth, and those shortages have not attracted investor attention of late because investors haven’t been thinking about economic growth generally.
The case for gold in a bull market
They’ve been worried about recession and they’ve been, you know, speculating on AI and tech, but they’ve been a little bit holding themselves close. If we get into a growth, a confident growth scenario, then I think metals go on a bull market run because they absolutely have to. The fundamentals are undeniable on that. And gold usually participates in a metals bull market.
So that’s exciting. I think that means gold does well. It maybe doesn’t like it, maybe isn’t the most exciting, but it does well in that unicorn scenario of growth with low inflation. The other option is that we get a recession right now. So the two sides of the spectrum for a while, we’ll just continue down the middle, which is where we’ve been forever, not knowing which way we’re going to go.
But when we do eventually choose a path, it’s either going to be the unicorn or it’s going to be the recession. And as we discussed before, gold very reliably does well in a recession. So I kind of think that no matter what happens, gold is well supported either as part of a broad metals bull market or because investors buy it in a recession.
For more trending gold stories, check out Stockhouse’s Gold page and for additional information on increasing the gold in your portfolio, check out our Wiser Wealth segment on the outlook for gold for the remainder of 2023.
For more of this interview, check out The Market Herald’s Thematica Gold Report.
On Wednesday, gold was trading at just over US$1,916 an ounce.
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