Muzhu Mining Ltd. (CSE: MUZU)
Creating lasting wealth by developing gold and silver properties with near-term mining potential
Metal investors usually take gold as the first choice because of its timeless value, its consistently rising prices, and its universal acceptance as an unprintable alternative to money.
There is a strong case for investing in gold, especially considering that in 2023, a year in which the Federal Reserve continued to raise interest rates, the precious metal still broke upward and eventually ended the year at a historic all-time high. That gave a huge boost to metals investor confidence.
And the Fed is expected to shift from rate hikes to rate cuts this year. Interest rate cuts will lead to pressure on the dollar, give the dollar-denominated commodity prices a lift.
On the other hand, analysts are concerned that the Fed’s rate hikes over the past two years have made businesses and consumers suffer. Therefore, do not rule out the possibility that the economy will continue to weaken or even fall into recession. If that does happen, gold will also be favoured as a hedge against falling stock markets.
For copper, the situation is slightly different, copper is one of the world’s most important metals for industrial use. Industry data shows that the largest portion of copper demand comes from the construction sector, which includes wiring and related industries, with another 40 per cent of demand coming from electrical and transport equipment.
As the world transitions to net-zero emissions, demand for copper in the transport equipment sector is expected to increase dramatically, including the technology sector associated with it.
In fact, twice as much copper is used in an electric car as in an average conventional fuel vehicle, and more than eight tonnes of copper is used in offshore windmills.
Earlier this year, the Wall Street Journal wrote that copper supply shortages are threatening the green energy transition. Annual demand for copper is expected to reach 36.6 million tonnes by 2031, compared to supply of around 30.1 million tonnes, which will lead to a 6.5 million tonne shortfall at the start of the next decade.
Copper’s key role in green technologies is expected to increase its consumption from 4 per cent in 2020 to 17 per cent in 2030, which could result in a need for a 54 per cent increase in copper supply by 2030 in order to achieve net-zero emissions.
Although supply is also increasing, it is still unable to keep up with demand growth. Copper prices are currently suffering from sluggish global cyclical demand growth. However, when global economic demand is expected to improve, copper prices will accelerate.
Earlier this month, Robert Sinn, founder of Goldfinger Capital, was interviewed by Kitco Mining at the Vancouver Metals Investor Forum, where he noted that copper and gold would be the perfect portfolio for 2024.
The bullishness on both metals is due to both the large amount of stimulus expected from China to help the economy grow and the expected Fed rate cuts. Sinn noted that copper is essential to economic development, while gold is a timeless store of value with no counterparty risk.
In the mining sector, there are a number of large gold mining companies that are actively acquiring copper projects, which is one of the mega trends in the mining industry, he added. Junior resource companies had a tough time in 2023 and should improve this year.
