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Gold Digger: ‘Assured growth’ – central bank buying spree set to drive gold higher in 2024

  • Central banks will drive the price of gold higher in 2024, believe various analysts
  • Spot gold prices seem stable to strong as we close out the year
  • The week’s top ASX gold-related stocks led by: KCC, EMU, MTC
  • The year’s top ASX goldies led by: SPR, OBM, BEZ

 

Before we delve into another gold article hook for one last week this year, let’s get a bead on the latest gold pricings.

First up, US of Larry Finkin’ A. Spot gold in USD is currently doing just fine at $2,053 per ounce.

In Aussie plastic bucks, it’s also not too far from all-time highs again, changing hands for $3,028.

Sporting roughly 11.6% YTD performance, it’s been a pretty decent year for the prettiest commodity of all.

That said some of you might think this > , and its 163% YTD gain is even prettier. (Is Bitcoin a commodity, though? SEC chair Gary Gensler can’t give a straight answer, but it very likely is. It can’t really be a security. There’s literally no one tangible, no governing body, to pin it to. We digress…)

Spot gold price (USD) YTD Source: abcbullion.com.au

 

So, who’s been the biggest buyer of actual, physical gold this year? Yep, you guessed it – it’s the world’s central banks. No surprise there.

And also no real surprise, it’s been led by the most centralised of all central banks – the People’s Bank of China (PBoC). And by a considerable margin.

 

China reaches ‘lucky 13th’ month of buying 

Source: World Gold Council – last updated for 2023 September quarter

 

The PBoC recently disclosed it had bought yet more gold in November, its 13th consecutive month.

Luckily, 13 is not an unlucky number in China. In fact, it’s generally associated with “assured growth”.

Perhaps the bank ought to leave it there, then, because 14 translates to something more like “assured shrinkage”.

There’s every chance it and other major world central banks have remained in full Smaug mode (gathering and hoarding the yellow metal) in December and will likely do so into 2024.

Why’s that, then?

The World Gold Council has some reasons, as do various analysts such as Sprott Asset Management and deVere Group’s Nigel Green and others.

Let’s run through a few of the main factors…

 

Helping the case for gold in 2024

De-dollarisation – you’ll notice in that chart above that (along with Japan, Switzerland, Thailand, Hong Kong and South Korea) BRICS nations’ central banks are prominent in the top 10 buyers of gold this year.

The move to reduce exposure risk to the US dollar has been a big part of gold’s good year, sending it to all-time highs recently.

A Sprott Asset Management report this month suggested that fears about assets being vulnerable, following the US seizure of Russia’s foreign exchange reserves of US$650 billion in February last year, have spurred central banks to “diversify away from USD and USD-based assets” and to buy more gold.

“In Q3 2023, central banks resumed their torrid gold purchasing pace, buying 337 tonnes of gold to bring the average of the last five quarters to 328 tonnes per quarter.”

• The US Federal Reserve and remaining recession risk – The Fed’s actions play into the thesis above for many a global counterpart central bank.

Jerome Powell and mates raised interest rates 11 times since March 2022, which pushed the US federal funds rate to the highest levels in 22 years. The Fed has now signalled at least three rate cuts next year.

Take this next commentary with a grain of salt, as it comes from a state-owned Chinese propaganda pamphlet, but China Daily notes: “The decline in the credit of dollar assets, as well as the risk of asset impairment caused by the US’ rate cuts, has also caused other central banks to sell dollars and buy gold.” Proposed 2024 rate cuts, that is.

Meanwhile, Robin Tsui, gold strategist for SPDRS ETFs in Asia Pacific at State Street Global Advisors (takes breath) said the following, in conversation with AsianInvestor:

“A shift to a more dovish Fed supports gold’s prospects, while the US dollar’s outlook in 2024 is lukewarm as a scenario of interest rate cuts may spur demand for non-dollar currencies as interest rate spreads narrow globally.”

By the way, Bloomberg’s commodities expert Mike McGlone reckons gold has the upper-hand advantage over its digital rival Bitcoin, in the event of US recession.

Geopolitcal turmoil – Yep, feeding the classic gold bug safe-haven schtick.

Geopolitics as a general narrative added about 3 to 6% to gold’s performance in 2023, the World Gold Council recently noted.

“Since the Russia-Ukraine war, central banks have been buying at 2.58 times the prior quarterly average of the preceding decade,” said Sprott, which believes global conflicts and de-dollarisation diversification factors have “put a floor under gold prices”.

Obviously ongoing conflict in Gaza and Israel is another contributing factor at play in gold’s age-old flight to safety, store-of-value narrative.

As deVere’s Nigel Green noted in his breakdown of risk factors for global markets in 2024: “Diversification and risk management strategies will be crucial for investors to navigate potential geopolitical shocks emanating from the Middle East.”

A big election year globally – An addendum to the geopolitical turmoil above, “2024 is marked by decisive elections in over 40 countries, representing more than 50% of the world’s GDP,” noted Green.

“Investors are likely to face increased volatility in the lead-up to and aftermath of elections. Shifts in political landscapes typically result in policy changes that impact various sectors, prompting investors to reassess their portfolios.”

Regarding this, The World Gold Council reckons: “In a year with major elections taking place globally, including the US, EU, India and Taiwan, investors’ need for portfolio hedges will likely be higher than normal.”

WGC strategist Joseph Catavoni also suggested to The Australian recently that:

“There are a lot of elections to be held in 2024 and this creates a very uncertain outlook that could provide uplift to gold markets and other risk assets. Markets are likely to react very differently to a Republican or Democrat outcome in the US.”

 

Re central bank buying, though – a caveat

Per the South China Morning Post, The World Gold Council’s Shaokai Fan noted and caveated:

“On the whole, we expect central banks to continue buying gold in 2024 but the levels may not reach the record amounts of buying that we have witnessed recently.”

And that’s because, while the central bank buying helps to push the price of gold higher, banks are ultimately likely to slow down when prices rise, then wait for a price dip.

And, gotta love a bullish price prediction…

… although, we have seen at least one forecast that’s quite a bit higher not so long ago.

But this one comes from that SCMP article mentioned above:

“Central bank purchases may stumble as gold prices are expected to rise as and when the Federal Reserve starts cutting rates next year. Prices could rise to US$2,400-US$2,500 per ounce by the middle of next year,” said Gnanasekhar Thiagarajan, director of Commtrendz Risk Management in India.

Not bad. We’ll take it.

 

Winners & Losers

Here’s how ASX-listed precious metals stocks are performing:

Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop.

Stocks missing from this list? Email [email protected] 

Code Company Price % Week % Month % YTD Market Cap
MRR Minrex Resources Ltd 0.017 0% -19% -47% $18,442,748
NPM Newpeak Metals 0.018 0% -82% -82% $1,799,131
ASO Aston Minerals Ltd 0.025 -7% -24% -69% $32,376,607
MTC Metalstech Ltd 0.195 44% 30% -63% $36,846,145
FFX Firefinch Ltd 0.2 0% 0% 0% $236,569,315
GED Golden Deeps 0.047 4% -10% -48% $5,429,550
G88 Golden Mile Res Ltd 0.017 -11% -29% -16% $5,599,622
DCX Discovex Res Ltd 0.002 0% 0% -33% $6,605,136
NMR Native Mineral Res 0.023 -15% -30% -79% $4,824,262
AQX Alice Queen Ltd 0.005 0% -38% -85% $3,454,921
SLZ Sultan Resources Ltd 0.022 38% 38% -74% $3,260,181
MKG Mako Gold 0.01 11% 0% -75% $6,624,094
KSN Kingston Resources 0.083 -6% 2% 2% $41,330,832
AMI Aurelia Metals Ltd 0.11 10% -4% -8% $185,874,414
PNX PNX Metals Limited 0.004 0% 0% -5% $21,522,499
GIB Gibb River Diamonds 0.03 0% -9% -50% $6,345,283
KCN Kingsgate Consolid. 1.36 1% 14% -21% $350,542,301
TMX Terrain Minerals 0.005 25% 11% -17% $6,767,139
BNR Bulletin Res Ltd 0.12 0% -27% 29% $35,233,599
NXM Nexus Minerals Ltd 0.043 -12% 8% -78% $16,729,586
SKY SKY Metals Ltd 0.038 9% -17% -21% $17,533,127
LM8 Lunnonmetalslimited 0.635 -9% -9% -29% $137,830,713
CST Castile Resources 0.081 1% 40% -15% $19,594,097
YRL Yandal Resources 0.082 -8% -7% -16% $19,247,545
FAU First Au Ltd 0.004 33% 100% 0% $6,647,973
ARL Ardea Resources Ltd 0.505 4% 6% -29% $98,349,717
GWR GWR Group Ltd 0.09 2% 15% 53% $28,909,499
IVR Investigator Res Ltd 0.036 -8% -12% -14% $55,430,428
GTR Gti Energy Ltd 0.007 -13% -13% -35% $14,349,630
IPT Impact Minerals 0.011 10% 0% 57% $31,511,743
BNZ Benzmining 0.235 -2% -34% -43% $26,252,196
MOH Moho Resources 0.011 22% 38% -48% $5,895,353
BCM Brazilian Critical 0.024 4% -11% -77% $17,758,964
PUA Peak Minerals Ltd 0.0035 0% 75% -42% $3,644,818
MRZ Mont Royal Resources 0.15 -3% -14% -14% $12,754,469
SMS Starmineralslimited 0.035 0% -3% -51% $2,657,298
MVL Marvel Gold Limited 0.013 18% 30% -50% $11,229,279
PRX Prodigy Gold NL 0.007 -13% -13% -42% $12,257,755
AAU Antilles Gold Ltd 0.022 10% -21% -27% $18,818,459
CWX Carawine Resources 0.115 -4% 10% 17% $27,154,427
RND Rand Mining Ltd 1.315 -4% 0% -3% $74,791,889
CAZ Cazaly Resources 0.029 0% -28% -15% $13,184,453
BMR Ballymore Resources 0.135 0% 35% -10% $23,804,629
DRE Dreadnought Resources Ltd 0.031 0% -3% -70% $107,165,304
ZNC Zenith Minerals Ltd 0.155 -6% -6% -42% $54,619,037
REZ Resourc & En Grp Ltd 0.013 -7% -13% -19% $6,497,475
LEX Lefroy Exploration 0.175 6% -3% -33% $34,352,807
ERM Emmerson Resources 0.055 -4% -5% -27% $29,959,038
AM7 Arcadia Minerals 0.076 -3% -16% -63% $8,287,808
ADT Adriatic Metals 3.4 5% 4% 8% $819,378,682
AS1 Asara Resources Ltd 0.011 -8% -8% -65% $8,060,040
CYL Catalyst Metals 0.79 -18% -1% -33% $173,924,460
CHN Chalice Mining Ltd 1.71 7% 8% -73% $665,127,250
KAL Kalgoorliegoldmining 0.025 -4% -4% -70% $3,962,518
MLS Metals Australia 0.036 6% -3% -19% $22,465,303
ADN Andromeda Metals Ltd 0.021 -5% -13% -52% $65,310,177
SRN Surefire Rescs NL 0.009 -10% 0% -25% $17,668,420
SIH Sihayo Gold Limited 0.0015 0% -25% -25% $18,306,384
WA8 Warriedarresourltd 0.054 -4% -5% -68% $27,562,783
HMX Hammer Metals Ltd 0.053 2% 6% -22% $46,979,589
WCN White Cliff Min Ltd 0.009 -10% -18% -36% $11,489,034
WRM White Rock Min Ltd 0.063 0% 0% -5% $17,508,200
ASR Asra Minerals Ltd 0.0075 -6% -25% -63% $12,217,468
MCT Metalicity Limited 0.002 33% 0% -33% $8,970,108
AME Alto Metals Limited 0.042 2% -7% -37% $30,223,204
CTO Citigold Corp Ltd 0.005 0% 0% -17% $14,368,295
TIE Tietto Minerals 0.625 1% 6% -11% $706,181,532
SMI Santana Minerals Ltd 1.01 7% 36% 54% $179,609,823
M2R Miramar 0.02 -26% -17% -74% $2,977,391
MHC Manhattan Corp Ltd 0.0035 -13% -13% -36% $10,279,429
GRL Godolphin Resources 0.042 11% 17% -49% $7,108,165
SVG Savannah Goldfields 0.045 2% -10% -76% $9,034,810
EMC Everest Metals Corp 0.082 1% -11% 4% $13,389,215
GUL Gullewa Limited 0.055 0% 0% -8% $11,262,521
CY5 Cygnus Metals Ltd 0.115 -8% -28% -70% $33,529,301
G50 Gold50Limited 0.14 12% 12% -44% $15,300,600
ADV Ardiden Ltd 0.17 6% -34% -44% $10,627,976
AAR Astral Resources NL 0.072 -5% -10% 0% $57,103,023
VMC Venus Metals Cor Ltd 0.105 -9% 17% 34% $19,921,512
NAE New Age Exploration 0.005 -17% -38% -29% $8,969,495
VKA Viking Mines Ltd 0.015 25% 36% 50% $15,378,876
LCL LCL Resources Ltd 0.016 -6% -33% -72% $15,218,345
MTH Mithril Resources 0.002 0% 0% -43% $6,737,609
ADG Adelong Gold Limited 0.005 0% -17% -29% $3,398,278
RMX Red Mount Min Ltd 0.003 0% -25% -40% $8,020,728
PRS Prospech Limited 0.033 10% 6% 23% $7,401,166
TTM Titan Minerals 0.026 -7% -12% -61% $43,192,226
NML Navarre Minerals Ltd 0.019 0% 0% -54% $28,555,654
MZZ Matador Mining Ltd 0.045 -13% 0% -61% $22,544,470
KZR Kalamazoo Resources 0.105 7% -13% -50% $17,993,795
BCN Beacon Minerals 0.026 -4% 0% -7% $97,675,972
MAU Magnetic Resources 1.02 2% 1% 19% $249,560,605
BC8 Black Cat Syndicate 0.255 -2% -6% -28% $77,460,162
EM2 Eagle Mountain 0.075 12% 29% -56% $22,872,515
EMR Emerald Res NL 2.94 5% 15% 148% $1,833,466,044
BYH Bryah Resources Ltd 0.013 8% -24% -49% $5,636,894
HCH Hot Chili Ltd 1 3% -12% 14% $119,445,206
WAF West African Res Ltd 0.97 5% 18% -17% $995,329,685
MEU Marmota Limited 0.044 -4% 7% -8% $46,587,225
NVA Nova Minerals Ltd 0.375 4% 47% -45% $79,083,735
SVL Silver Mines Limited 0.16 -3% -3% -20% $224,693,143
PGD Peregrine Gold 0.245 7% -13% -36% $14,579,180
ICL Iceni Gold 0.053 2% -9% -34% $12,712,429
FG1 Flynngold 0.051 2% -40% -49% $7,431,937
WWI West Wits Mining Ltd 0.012 0% -4% -25% $29,164,700
RML Resolution Minerals 0.003 0% -25% -63% $3,779,990
AAJ Aruma Resources Ltd 0.027 -10% -23% -49% $5,316,071
AL8 Alderan Resource Ltd 0.005 0% -29% -29% $5,534,307
GMN Gold Mountain Ltd 0.005 25% -17% -29% $11,345,393
MEG Megado Minerals Ltd 0.023 -8% -26% -49% $5,852,478
HMG Hamelingoldlimited 0.066 -12% -22% -54% $10,395,000
TBA Tombola Gold Ltd 0.026 0% 0% 0% $33,129,243
BM8 Battery Age Minerals 0.185 3% -21% -63% $16,490,324
TBR Tribune Res Ltd 2.68 -1% -9% -33% $140,614,446
FML Focus Minerals Ltd 0.18 6% 9% -29% $51,580,556
GSR Greenstone Resources 0.007 -7% -13% -78% $9,576,794
VRC Volt Resources Ltd 0.007 0% 17% -53% $28,910,747
ARV Artemis Resources 0.021 11% -34% -16% $35,515,119
HRN Horizon Gold Ltd 0.3 0% 3% -2% $43,451,977
CLA Celsius Resource Ltd 0.013 -7% 8% -19% $29,198,672
QML Qmines Limited 0.084 -6% 14% -49% $17,717,788
TCG Turaco Gold Limited 0.125 4% 47% 116% $73,400,000
KCC Kincora Copper 0.044 52% 69% -40% $8,792,742
GBZ GBM Rsources Ltd 0.01 -9% -23% -77% $6,203,218
DTM Dart Mining NL 0.016 7% -11% -71% $3,641,274
MKR Manuka Resources. 0.086 -10% 110% 1% $48,600,325
AUC Ausgold Limited 0.029 -6% 4% -38% $66,588,095
ANX Anax Metals Ltd 0.031 0% 15% -42% $14,908,447
EMU EMU NL 0.0015 50% 50% -69% $3,037,157
SFM Santa Fe Minerals 0.043 0% 0% -46% $3,131,208
SSR SSR Mining Inc. 16.23 0% -4% -30% $381,826,785
PNR Pantoro Limited 0.051 -2% 0% -47% $265,405,556
CMM Capricorn Metals 4.68 3% 3% 2% $1,765,751,050
X64 Ten Sixty Four Ltd 0.57 0% 0% -11% $130,184,182
SI6 SI6 Metals Limited 0.0055 10% -8% -8% $10,966,227
HAW Hawthorn Resources 0.099 2% 6% -14% $33,166,546
BGD Bartongoldholdings 0.255 2% 6% 28% $49,861,997
SVY Stavely Minerals Ltd 0.047 0% -28% -81% $17,951,184
AGC AGC Ltd 0.068 8% 5% 13% $6,800,000
RGL Riversgold 0.011 -8% 0% -63% $10,644,276
TSO Tesoro Gold Ltd 0.027 -7% 59% -25% $31,076,739
GUE Global Uranium