AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
There is no doubt that 2024 has been the best year for the price of gold over decades, and after gold prices make all-time highs several times, a growing number of analysts now believe it is only a matter of time before the price of gold continues to make new record.
Scott Bauer, CEO of Prosper Trading Company, said that gold and silver and industrial metal copper have performed well in the first half of this year, and despite the recent falling of copper prices, the outlook for the precious metals in the second half of the year remains bullish, with one of the key reasons being the expectation that the Federal Reserve will cut interest rates sooner than later.
The CME Fed Watch tool shows that Wall Street is pricing in a 100 per cent likelihood of a rate cut in September, with around an 80 per cent chance of further cuts in November and December. Historically, commodities have often been viewed as a hedge against inflation.
Bauer noted that as the dollar weakens, commodities such as metals and oil typically do well because more of them can be bought with the dollar, and gold, silver and copper may be in short supply in the near future.
Copper prices hit a record high in May but have since retreated about 20 per cent. Analysts believe the demand outlook for copper is very positive as it is used in the manufacture of artificial intelligence chips and electric car production, with COMEX futures for copper trading at record levels this year. However, the recent selloff in global tech stocks and scepticism about the growth of the AI industry has hit copper prices hard.
On top of that, most of the demand for copper comes from China, whose recent economic data suggests that the economy is not recovering yet. If Chinese orders and demand continue to weaken, this could indicate that the fall in copper prices is more than just temporary.
As for gold, the prevailing view among analysts is that the prospect of falling interest rates and ongoing geopolitical risks are ‘tailwinds’ for gold. More market participants, including funds in North America, have been turning to safe-haven assets amid continuing uncertainty, and global central banks have been buying gold at record levels.
Led by China, central banks purchased 1,037 tonnes of gold in 2023, according to the World Gold Council (WGC). Data from the WGC’s annual survey shows that 29% of central banks plan to increase their gold reserves in the next 12 months.
Turning to silver, Bauer emphasised the strong demand for its utility in emerging technologies, especially given that it conducts electricity faster than any other metal. The Silver Institute reports a silver shortfall of 184.3 million ounces in 2023 due to strong industrial demand, with a silver supply shortage likely to continue beyond 2024.
Bauer cautioned investors to keep an eye on the gold-silver ratio, as historically whenever it has risen above 80, it has signalled that silver is undervalued relative to gold. The last three times this has happened, silver has risen 40 per cent, 300 per cent and 400 per cent.
He concludes that expectations of interest rate cuts and ongoing geopolitical events provide potential impetus for gold and silver to rally before the end of the year, with the industrial metals likely to lag behind, given copper’s closer relationship with Chinese economic data.
