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Regular readers of bullionbox are not accustomed to digesting predictions or forecasts in our resource materials. To be fair, in any economic climate, it is a fool’s game to make firm predictions about any market or asset class. In a tumultuous market, it would not even be an educated guess, but just a shot in the dark. Even a broken clock is right twice a day, so in the latter example there will be prognosticators that will claim a victory to further their reputations whichever way the market ends up. The safest prediction for 2023 is what the team at BBS have long adhered to. It is always a good time to buy precious metals, and some times are better than others.
Looking Towards 2023
The interesting thing about this eve of a new year is the gathering consensus that next year will be a fertile environment for Gold and Silver. The typical conversation is about stocks and bonds and, most recently, crypto-currencies. But this year there are more headlines that share a bullish outlook for the normally alternative investments, precious metals.
Denmark’s Saxo Bank’s respected commodities strategist Ole Hansen leads the band wagon with a bold prediction in which he believes that gold has the potential to reach $3,000.00 – $4,000.00 per ounce during the calendar year 2023. Hansen expects that markets will wake up to the fact that inflation is not transitory and is not going to reverse itself. He expects that the world will see currency devaluations, especially the USDollar, which has a direct correlation with gold. Hansen also cites three other significant influences to support his theory. First, over tightening by central banks in a failed attempt to control inflation while causing individual economies to experience a deep and prolonged recession. Second, he forecasts that countries will continue to ramp up deficit spending with ambitious projects like energy transition. And lastly, a “continuing war mentality” would require central banks to shy away from holding foreign exchange reserves in favor of self-reliance, which would favor gold.
Bank of America has gone on record to announce gold should trade over $2,000.00 per ounce in 2023. Based on the assumption that the United States Federal Reserve will pivot on one of the upcoming FOMC meetings and ease off the throttle by lowering the size of the interest rate increases. This change in the battle against inflation by the Fed would bring new buyers back into the market. Additionally, the increasing appetite of central banks to hold gold in their foreign exchange funds. In Q3 2022, central banks combined to add more gold to their coffers than anytime in the last 50 years. With the addition of 400 tons of the yellow metal in the three-month period, supports the theory of Saxo Bank previously outlined. The World Gold Council expects 25% of Global Central Banks to add to their gold holdings in 2023.
Standard Chartered Bank’s Eric Robertsen suggests gold could trade as high as $2,050.00 per ounce in 2023 following a Bitcoin drop to $5,000.00, the impeachment of an American President, and a possible tsunami of bankruptcies in the technology sector following a decline in tech stocks.
Credit Suisse, J. P. Morgan Chase, and Goldman conspire to have a more conservative outlook looking for gold to maintain current pricing in a range between $1,650.00 and $1,800.00. While not a lofty or entertaining forecast, the lesson to be learned from all the conversations is that no one is expecting the Precious Metals sector to retreat. With all other asset classes facing at the very least a stressful period ahead, Gold and Silver continue to provide safe haven protection in uncertain times. In the coming months and perhaps years, during the upcoming global geopolitical upheavals, the continuing war in Ukraine, the extended path of inflation, the next chapter and repercussions of an imminent and long overdue recession, attention should be focused on the return of your money, rather than the return on your money. Precious metals are poised to be an investor’s life jacket in the coming storm. Physical over paper will prevail. If you were on a sinking ship, would you rather have a life preserver, or a picture of a life preserver?
