Alain Corbani, head of mining at Montbleu Finance, shared his outlook for the US economy in 2024, explaining that as it weakens in the new year the US Federal Reserve will need to lower rates.
Against that backdrop, he sees the gold price reaching US$2,500 per ounce in the next 18 to 24 months.
‘Each time the Fed moves from a tightening mode to a pause mode, gold goes up by 50 percent, fivefold,’ he said. ‘So I expect gold to hit US$2,500 in the next 18 months, two years. There’s no reason that that doesn’t happen — none.’
Looking over to gold stocks, Corbani said that while the perception is that they’re performing poorly, they’ve risen about the same amount as gold has since July 2022. And they did so while dealing with inflationary headwinds.
‘My point is to say those gold miners did as well as gold even though they had to fight strong, historically strong headwinds, ie. inflation — they had to fight inflation on all fronts, whether it was coming from the supply side, or whether it was coming from the salary side. And they did as well as gold, but in a much more volatile way,’ he explained.
Corbani, who also manages the Global Gold and Precious Fund, sees inflation becoming less of a problem for gold miners moving forward, and encouraged investors to be patient as they wait for these stocks to break out.
When asked which gold equities present the most opportunity, he pointed to companies with growth potential.
‘In a cycle you have two phases, and we have entered the second phase. The first phase is we restructure, we focus on strengthening the balance sheet and we focus on profitability. And we get rid of as many marginal assets as possible,’ Corbani said. In phase two the mandate changes — shareholders want to see growth as well as financial discipline.
‘This is exactly where the fund is positioned. The fund is positioned in companies which could provide growth to other companies, or companies which have a profile of production growth. That would be about 50 percent,’ he said.
Watch the interview above for more of Corbani’s thoughts on gold and gold stocks in 2023.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.