For some, the question is not whether the recession will take place or not, but the matter is settled and the question is only the timing and whether this recession will be in the interest of gold and its prices?
Highwood Securities published, in its outlook for 2023, that the economic recession in the United States of America is one scenario that cannot be avoided as long as the curve of Treasury yields is inverted, with a gap that is the largest in 4 decades between the yields of the 10-year and 2-year Treasury bonds.
In this atmosphere, analysts believe that this will lead gold prices to rise and significantly outperform the stock markets.
“Despite the current volatility in the market, gold has been a source of relative stability recently and continues to provide investors with a safe haven in times of turmoil,” the analysts said in their report. “Thus, we believe that gold is less risky compared to other speculative areas in the market.”
The price will reach 2000$?
The Canadian investment firm, which has more than C$15 billion in assets under management, said it expects gold prices in 2023 to average around $1,945 an ounce, up 2.4% from its previous estimate. At the same time, analysts said they see prices averaging $1,975 an ounce in 2024.
And what about silver?
Analysts are also bullish on silver as they expect the overall price to average around $24.31 an ounce. The average price is expected to increase to $24.69 an ounce in 2024.
After the best start to the year in a decade, gold and silver have struggled to attract the attention of new investors this month. For the time being, gold prices are staying neutral, at around $1,850 an ounce. Meanwhile, silver prices are trying to maintain the support above $21.50 an ounce.
Gold after 2023
Looking ahead, Haywood added that higher gold prices over the next two years should continue to support the mining sector.
“Our outlook for modest increases in gold and silver prices considers that a weaker US dollar outlook over the next two years is expected to at least partially offset inflation and position the sector with an attractive platform to protect operating cash flow and deliver returns to shareholders,” the analysts said. “Because of the cash generation provided by the mining sector, we believe sector consolidation will continue as company balance sheets are used to increase asset bases to expand resources and/or expand production.”
Best options in gold
Focusing on organic growth, the company said the top mid- and junior producers are Caliber Mining, Equinox Gold and Karora Resources.
Top company picks in the exploration sector are Amex Exploration, Dolly Varden Silver Corp, Filo Mining Corp, and Osisko Mining Inc.