22 November 2023
A number of the world’s largest institutional investors are surveying the market, looking at depressed stock markets, weaker currencies, and political uncertainty, and are getting unsurprisingly bullish about gold.
The price of gold, so inextricably linked to the value of the US dollar, has had a tumultuous year. A booming stock market, deregulation, and a lowering of the US corporate tax rate has led to a strengthening of the dollars position in the early part of this year, but the subsequent readjustment has not been pretty for a number of investors.
A rate hike in September to the highest point in a decade also pushed the dollar higher, putting more downward pressure on the price of gold. But institutional investors think that this tide is already turning, and are upgrading their outlooks on the precious metal.
With the US dollar index (which compares the US dollar against a basket of the euro, Japanese yen, pound sterling, Canadian dollar, Swedish krona and Swiss franc) reaching a 52 week high last week, John LaForge, head of Wells Fargo’s real asset strategy, is tipping that gold will bounce as the market acknowledges that the dollar is “a little too high”.
Wells Fargo isn’t alone in making this prediction, either. Bank of America Merrill Lynch strategists, including James Barty, are also backing bullish options linked to the precious metal.
“The current environment is one where the precious metal is regaining its prominence… and has value now,” Barty wrote in an investor note earlier this month.
JP Morgan has also released its own assessment of the market for gold in November, going so far as to predict the prices over the next two years. These estimates from the JP Morgan Commodities Research division are forecasting that gold will average around USD $1300 an ounce in 2019, and then upwards of USD $1450 in 2020.
This week saw a little positive movement in this direction too, with the spot price of gold rising on Monday along with gold futures, and the dollar dropping to two-week lows.
Gold has long been seen by retail and institutional investors alike as the safe haven when the market around them is becoming increasingly volatile or even just bearish. It has remained valuable throughout history for precisely this reason, offering a stable store of value for every financial organisation, all the way up to central banks.
While gold may seem like an appealing option now, with the markets trending in the manner they have in the past months, the concern is always that the large institutional investors have made their moves, and these forecasts are already priced in. How can smaller retail investors hope to compete when the institutions are positioning themselves first, and then telling everyone about it afterwards?
Well, the answer appears to be look where they do not. PVW Resources is a micro-cap gold mining operation based in Australia, with a significant project that they believe is ready to fast-track to production. For an investor looking for a path that hasn’t been already trampled by the behemoths, this might be it.
PVW has a holding at Mt. Clifford, where a number of factors have come together to put them in a very privileged position. The land has been developed over the past 30 years by a family of small-scale underground miners, who have unearthed more than 2,000 ounces of gold. To unearth the full potential of the holding, the family has now engaged the commercial exploration team at PVW Resources, who have a strong history of bringing exploration companies to production, to rapidly progress the project where there is already visible high-grade gold mineralisation.
If you are interested in finding out more about the opportunity that PVW presents, you can view the IPO Prospectus here.
*Reachmarkets Australia Pty Ltd trading as Reach Markets are the advisors assisting PVW Resources with the management of an Initial Public Offer (IPO) and may receive fees depending on whether the offer is taken up by investors.