January 02, 2023

Our 2024 Predictions, Part 1

It’s that time of the year… 2023 is almost over, and investors turn their attention to what they should expect next year.

Here at the Canadian Mining Report, we focus on commodities and Canada-based mining juniors.

As this year comes to a close, this industry is having a moment of celebration.

Gold has breached its all-time highs, and as investors expect interest rates to decline next year, gold could continue performing exceptionally well. So far this year, it’s up 10.3% as of writing.

In our opinion, this is just the beginning of a secular gold bull market.

But we’re getting ahead of ourselves… Let’s take a look at the three trends shaping up in the world.

Trend #1: More Chaos

Gold and gold mining companies thrive when the world is going through a volatile period.

And 2023 has been a calamitous year. The war in Ukraine continues and increasingly looks like a long-term stalemate.

The conflict in the Middle East flared up and consumed the world’s attention.

And then there’s China… As the United States overstretches itself trying to help Ukraine and Israel, China is watching for the right moment to attack Taiwan.

China’s authoritarian leader, Xi Jinping, is preparing the country’s army to potentially invade Taiwan by 2027. But it could happen sooner.

And if it does, global markets could tumble. Taiwan isn’t only a key interest for China and the U.S., it’s also the country where most of the world’s semiconductors are produced.

If Taiwan gets attacked, global supply chains will suffer… and the AI revolution could grind to a halt, at least for a while.

There are a lot of sectors that will suffer from more geopolitical volatility.

But gold and the Canadian mining sector in particular could potentially add protection to investors’ portfolios.

Gold is not only widely accepted as an inflation hedge, but it’s also the ultimate safe haven that exists pretty much outside of mainstream finance.

If the world becomes more chaotic, gold could win, in other words.

Trend #2: The Decline of the U.S. Dollar

We’re not going to go into that much detail about how the value of paper currencies decreases over time… One trip to the grocery store, and you’ll get the idea.

Prices have been soaring after the pandemic, and the only thing that kept the value of the U.S. dollar high was a series of quick interest rate rises by the Fed.

(High domestic interest rates, in general, support a currency’s value.)

But now the trend is reversing.

Europe has recently provided a hint of where inflation is headed next. EU-wide, inflation declined to 2.9% annually in October. In September, it was much higher, at 4.3%.

This gives you an idea of what could happen in the United States and Canada as well.

And when it does (which we’re confident will happen), the value of North American currencies, and the U.S. dollar, in particular, will decline.

That is going to be great news for gold.

Yes, it is an inflation hedge. When prices rise, gold tends to perform well.

And make no mistake, they are still rising… even though at a slower pace.

But as global central banks start lowering their interest rates, gold could continue performing well.

And this could be a long-term trend. Central banks were quite slow to react to soaring inflation in the post-pandemic years, and they will be slow to take interest rates to their pre-2022 levels.

This tells us that gold and gold mining companies will have a catalyst pretty much every time the Fed speaks…

This tells us that next year, we could see a series of events that would help drive the price of gold and the value of gold mining companies higher.

But There Will Be Other Trends…

These two aren’t the only drivers of the price of commodities and mining juniors, of course.

In the next part of this outlook, we will talk about one of the biggest threats to the global economy.

Some analysts say that it’s not as strong as it seems… and that it could easily crumble under the weight of debt, wars, and political chaos.

This could have material implications for every asset, from bonds to currencies and commodities.

Stay tuned…

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Disclaimer: This report is for informational use only and should not be used an alternative to the financial and legal advice of a qualified professional in business planning and investment. We do not represent that forecasts in this report will lead to a specific outcome or result, and are not liable in the event of any business action taken in whole or in part as a result of the contents of this report.

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