Modern Mining March 2023

Casting gold at a gold mine. tandem with the stock market in times of turmoil but, in contrast, gold has offered ‘true’ diversification, moving opposite to stocks when uncer tainty increases. As a result, this scenario could generate significant demand for gold as a safe haven investment, and the resulting cost pre mium. Historically, gold has typically fared well during recessions and can provide protection, delivering positive returns in five out of the last seven recessions. 3. A soft landing While data shows a mild recession and weaker earnings forecast as the most likely outcome for 2023, a third, possible scenario is a softer than anticipated landing. This could lead to restored business confidence and increased spending, with risk assets likely faring well and bond yields remaining high. In this situation, the combination of weaker institutional investment demand and a slowdown in retail investment (due to increased market confidence) could be less favourable for gold’s performance. A golden future? While the current consensus continues to point to recession, the jury is still out on how severe it will be. On balance, gold’s performance is likely to remain stable but with positive upside in 2023 as it faces competing crosswinds from its drivers. Nevertheless, amid the current conditions and likely scenarios for 2023, the gold market will continue to benefit from its diverse demand drivers and dual role as both a consumer good and investable asset. 

March 2023  MODERN MINING  11

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