Gold and Copper Look Well-Positioned in 2023
Investor Alert

Gold and Copper Look Well-Positioned in 2023

Author: Frank Holmes
Date Posted: February 3, 2023 Read time: 33 min

The opportunity can be with gold-backed ETFs and gold mining stocks.

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The price of gold stopped just short of hitting $1,960 an ounce on Thursday, its highest level since April 2022, before plunging below $1,900 on Friday following a stronger-than-expected U.S. jobs report, indicating that the current rate hike cycle may be far from over.

I don’t believe that this takes away from the fact that gold posted its best start to the year since 2015. The yellow metal rose 5.72% in January, compared to 8.39% in the same month eight years ago.

I also maintain my bullishness for gold and gold mining stocks in 2023. Gold was one of the very few bright spots in a dismal 2022, ending the year essentially flat, and I expect its performance to remain strong in the year ahead.

Record Retail Demand in 2022

The big headline in the World Gold Council’s (WGC) 2022 review is that total global demand expanded 18% year-over-year, reaching its highest level since 2011.

Central banks were responsible for much of the growth, adding a massive 1,136 metric tons, the largest annual amount since 1967. China began accumulating again in 2022 for the first time in three years, continuing its goal of diversifying away from the dollar.

Meanwhile, retail demand for bars and coins in the U.S. and Europe hit a new annual record last year in response to stubbornly high inflation and the war in Ukraine. Western investors gobbled up 427 tons (approximately 15 million ounces), the most since 2011.

Investors to Shift from Physical Bullion to Gold-Backed ETFs in 2023?

Where I see the opportunity is with gold-backed ETFs and gold mining stocks, both of which didn’t see the same level of demand as the bullion market last year. Investors withdrew some 110 tons from physical gold ETFs, the second straight year of declines, though at a slower pace compared to 2021. Even when the gold price began to climb in November, investors didn’t seem to respond as they have in past rallies.   

The WGC suggests that demand for ETFs that hold physical gold will “take the baton” from bars and coins this year. That remains to be seen, but I always recommend that investors diversify, with 5% of their portfolio in bullion, gold jewelry and gold-backed ETFs.

Another 5% can be allocated to high-quality gold mining stocks, mutual funds and ETFs. We prefer companies that have demonstrated strong momentum in revenue, free cash flow and high-growth margins on a per-share basis. 

$1 Trillion Investment in the Energy Transition, on Par with Fossil Fuels

If I had to select another metal to watch this year (and beyond), it would be copper. The red metal, we believe, will be one of the greatest beneficiaries of the global low-carbon energy transition that’s taking place. As we seek to electrify everything, from power generation to transportation, copper is the one material that’s used every step of the way.

What’s more, investment in the transition is accelerating. Last year, a little more than $1 trillion was plowed into new technologies such as renewable energy, energy storage, carbon capture and storage, electrified transport and more.

Not only is this a new annual record amount, but, for the first time ever, it matches what we invested in fossil fuels, according to Bloomberg New Energy Finance (NEF).   

China was the top investor, responsible for $546 billion, or nearly half of the total amount. The U.S. was a distant second at $141 billion, though the Inflation Reduction Act (IRA), signed into law in August 2022, has yet to be fully deployed.

Copper’s Supply-Demand Imbalance

At the same time that copper demand is growing due to the energy transition, the global supply pipeline is thinning due to shrinking exploration budgets and a dramatic slowdown in the number of new deposits.

Take a look at the chart above, courtesy of S&P Global. Copper exploration budgets have not managed to generate a meaningful increase in major new discoveries. According to S&P Global, most of the copper that’s produced every year comes from assets that were discovered in the 1990s.

It may be a good time to consider getting exposure with a high-quality copper miner such as Ivanhoe Mines or a broad-based commodities fund that gives you access to copper exploration and production.


Index Summary

  • The major market indices finished mixed this week. The Dow Jones Industrial Average lost 0.15%. The S&P 500 Stock Index rose 1.64%, while the Nasdaq Composite climbed 3.31%. The Russell 2000 small capitalization index gained 3.91% this week.
  • The Hang Seng Composite lost 4.35% this week; while Taiwan was up 0.81% and the KOSPI fell 0.15%.
  • The 10-year Treasury bond yield rose 2 basis points to 3.526%.

Airlines and Shipping


  • The best performing airline stock for the week was Allegiant, up 16.5%. Alaska Air announced late last year that it is resuming its share repurchases, if only to keep the share count flat. Repurchases are expected to range from $75 MM to $100 MM this year. The airline did not dilute equity holders during the pandemic and managed to maintain its strong balance sheet. The company ended the quarter with debt to cap at 49%, the high end of the targeted range of 40% to 50%.
can the restart of Alaska Air's Stock Repurchase Program Help the Stock
  • Mitsui OSK’s third-quarter profit of ¥139.5 billion strongly beat the ¥81.1 billion consensus. The main difference being stronger profit in non-container shipping operations such as dry bulk, car carriers and energy, and a 14% overshoot versus consensus in Ocean Network Express.
  • Allegiant reported fourth quarter earnings per share (EPS) of $3.17, which is $2.50 better than analyst estimates of $0.67. As reported by, revenue for the company came in at $611.55 million for the quarter, versus the estimate of $580 million.


  • The worst performing airline stock for the week was Skywest, down 9.0%.  According to Bank of America, Chinese airlines’ fourth quarter 2022 net losses were worse-than-expected, and some near-term pressure is likely as consensus book value is revised lower. China Southern saw net loss increasing by 130% quarter-over-quarter. Despite the disappointment, the bank remains positive on Chinese airlines with the rapid easing of Covid policy, implying a year of traffic recovery and strong ticket prices in 2023.
  • According to Drewry Maritime Research’s most recent tally, the order book stands at more than 900 ships, with deliveries this year alone expected to add 1.4 million TEUs (twenty-foot equivalent units, a standard measure of cargo capacity). That’s equal to about 5% of the current global total. New capacity is expected to increase by a record 2 million TEUs next year and 2.1 million in 2025 to reach 27.2 million, up almost 50% from a decade earlier, according to Drewry.
  • European airline bookings, as a portion of 2019 levels, declined to -13% in the week, mainly driven by a higher base. Total net sales were up 3% on this week but were down by 9 points to -13% versus 2019. Intra Europe net sales declined by 12 points to -20% versus 2019 and were up 3% this week. International net sales were down by 8 points to -11% versus 2019 (versus -3% in the prior week) and were up 3% this week.


  • A key priority for American Airlines in 2023 is for the company to continue to pay down debt and improve its balance sheet. American repaid $8.2 billion of debt in 2022. This gets them over halfway towards the goal of reducing debt by $15 billion by 2025. The company has $3.3 billion debt repayments in 2023.
  • On Wednesday morning, FedEx issued a letter to employees indicating it is undertaking changes in the organization’s structure that will cause a >10% reduction in management at the director and officer levels. It may be on the order of 1,000 employees who could be affected with cost savings in the ballpark of $200 million annually.
  • Valor newspaper reports that ABEAR (Association of Brazilian Airlines) has been meeting with members from the new government to push for a reduction in jet fuel prices through a change in Petrobras’ pricing formula. The president of ABEAR states that jet fuel represents 40% of air ticket prices in Brazil (versus 22% in the U.S. and 24% in Europe), mainly distorted by its pricing formula.


  • Alaska Air cited approximately one-third of its revenues being tied to California, a region it still expects to be down low-teens versus 2019. Similarly, given its larger corporate exposure to technology companies (38% of corporate business pre-pandemic), West Coast business remains less recovered than other regions.
  • Morgan Stanley now thinks supply/demand deterioration in the container space will be deeper and longer than the stock market expects. Container spot rates have fallen below pre-pandemic levels despite industry efforts to rein back supply. With the supply of new ships heading for a record high in 2023-2024, the bank thinks it will take longer to arrest future supply/demand deterioration, even when considering widespread tonnage adjustment as seen in the past.
  • Southwest Airlines’ first quarter will also be a loss, as management noted some lingering impacts from the operational disruption which will be a $300-$350 million cost headwind. The network issues meant that 2023 got off to a slow start, but management believes that the vast majority of the first quarter impact is isolated in January/February and that booking curves for March, including corporate activity, appear strong.

Luxury Goods and International Markets


  • Luxury stocks are starting 2023 off on a strong note. Louis Vuitton, the largest luxury name by market cap, Hermes International, Burberry, and Compagnie Financière Richemont all reached new highs in January. The consumer discretionary sector was the best performing within the S&P 1500 Index, gaining 15.54%.
  • China unexpectedly posted stronger purchasing managers’ index (PMI) numbers. Manufacturing PMI was reported at 50.1 in January versus 42.6 in November. Service PMI noticed an even stronger recovery, and was reported at 54.4 versus 41.6, above the 50 level that separates growth from contraction. The Eurozone posted stronger-than-expected preliminary PMIs for January as well.
  • Nordstrom Inc. was the best performing S&P Global Luxury stock for the week, gaining 43.21%. Shares gained almost 25% in a single day on Friday after larger buying from investors and upgrades by analysts. 


  • Hong Kong’s economy shrank 3.5% in 2022, more than expected. Bloomberg economists were predicting GDP contraction of 3.1%. In the prior year, Hong Kong’s GDP expanded by 6.4%.
  • The final reading for S&P Global’s U.S. Manufacturing PMI in January was reported at 46.9, slightly above the prior month’s reading of 46.8 and remaining below the 50 level. ISM Manufacturing, which is also a leading economic indicator for the level of economic activity in the manufacturing sector, dropped to 47.4 in January from 48.4 in December.
  • Nio Inc., a Chinese electric car maker and distributor, was the worst performing S&P Global Luxury stock for the week, losing 11.96%. Hong Kong stocks trading on the New York Stock Exchange (ADRs) dropped after the U.S. decided to postpone Secretary of State Antony Blinken’s upcoming trip to China.  


  • China and the Eurozone, both markets with significant appetites for luxury goods and services, have been releasing stronger-than-expected economic data so far this year. China’s reopening and the government’s willingness to help the consumer and property market will support spending. In Europe, dropping inflation and lower energy prices are diminishing the possibility of a recession. 
  • On Thursday, Hong Kong authorities announced giving away half a million air tickets in an effort to revive tourism. The tickets will be distributed through Cathay Pacific Airways Ltd., its budget carrier HK Express, as well as Hong Kong Airlines International Holdings Ltd. The giveaway will begin at the start of March and last six months.
  • Bank of America’s luxury research team remains optimistic about performance of the sector. They expect to see positive earnings per share revisions in 2023 supported by China reopening, pricing power, and recovery in global tourism, despite tough conditions in developed markets. Further, they predict that more than half of the sector’s revenue growth this year will be attributed to strong consumer spending in China. 


  • The Philippines aims to impose a 25% luxury tax on selling prices of residential units priced above PHP 100,000 per square meter. This price point practically covers all condo offerings in Metro Manila, directly hitting middle-income families.
  • The travel recovery in China will be gradual and will not reach pre-pandemic levels this year.  Bloomberg predicts that mainland China arrivals to Hong Kong could rebound to 63% of 2019 levels in 2023. This could accelerate to 78% if Covid-related measures continue to ease. China may be willing to revise the 60,000 daily border-crossing limit by land in the first half of this year.
  • China’s reopening may keep global inflation elevated for longer. The government in China already announced its support for growth-friendly policies, boosting consumption and stabilizing the property sector. Production in China has slowed due to ongoing Covid measures in the past three years and demand for goods and services will increase with faster-than-expected economic recovery.

Energy and Natural Resources


  • The best performing commodity for the week was molybdenum, rising 24.58%. Molybdenum prices soared to over $47 per pound in recent days, after averaging $31 per pound in January, and well above the averages observed in 2022. Supply concerns drove prices higher in an already tight market. Civil unrest in Peru affected supply of molybdenum concentrates and customers were prepared to pay elevated prices to avoid interruptions in the production of specialty steel.
  • Iron ore prices were up this week as demand from steel mills remains solid on expectations of a demand rebound and higher steel prices. Demand has also emerged from Europe as some blast furnaces come back online. On the supply side, shipments out of Port Hedland increased 4%, while Brazilian shipments continue to be disrupted by heavy rainfall.
  • Bloomberg reports speculators have increased their net-long positions in copper at the end of January, data shows. This is the highest net-long position in copper for the last eight months, perhaps reflecting supply constraints from Peru might lead to a spike in price off copper.


  • The worst performing commodity for the week was natural gas, dropping 16.15%. Natural gas prices have only had one weekly gain over the past 10 weeks. In addition, oil marked its third monthly drop in price and copper notched a second weekly decline, largely on a lack of demand pick-up out of China.
  • JPMorgan is revising its U.S. Lower 48 oil production forecasts to incorporate updated views on activity levels and the resulting production volumes. Its 2022 and 2023 exit rates are now 11.90 MMBo/d and 12.21 MMBo/d, which compare to the prior estimates of 11.89 MMBo/d and 12.26 MMBo/d, respectively.
  • Asian coal benchmarks are set for their biggest monthly decline on record, easing the inflationary pressure of last year’s surge in prices for the region’s most
    popular power-generation fuel. Front-month thermal coal futures at Australia’s Newcastle port have fallen 34% this month, the most on record going back to 2009.


  • RBC’s uranium analyst Andrew Wong is flagging that the Sprott Uranium Trust is now trading above NAV again for the first time in a while, which means the Trust ATM can be making sales to raise cash to buy more physical uranium and tighten up the physical uranium market further. Spot uranium prices have recently ticked up to over $50 per pound and have been at $45-$50 for some time, indicating the spot market still looks tight.
  • GM struck a deal this week with Lithium Americas to receive exclusive access to Phase 1 production from the Thacker Pass project in Nevada by making a $650 million equity investment. According to Bloomberg, this represents the biggest investment by an automaker to produce lithium batteries. GM with make the investment. The investment is subject to permitting issues such as a final Record of Decision.
  • Iron ore rose to a seven-month high as a drop in Chinese stockpiles added to optimism demand for the steel-making ingredient to rebound this year.  Iron ore has been rising since early November on a stream of policies from Beijing designed to aid the property sector, and extended gains following the dismantling of zero-Covid policies.
iron prices are spiking off the lows


  • One of Peru’s biggest copper mines will stop production if transport disruptions linked to nationwide political unrest don’t end, according to its owner MMG Ltd. Protests have rocked the country for almost two months following the impeachment and replacement of former President Pedro Castillo. About 30% of Peru’s copper production is at risk, according to industry association SNMPE.
  • The Philippines is considering taxing nickel ore exports among options to push miners in the world’s second-biggest supplier of the metal to invest in processing instead of just shipping raw minerals, (a route that top nickel producer Indonesia has taken and succeeded in). “We want to move out from being just part of the supply chain. We want to be part of the value chain,” Environment and Natural Resources Secretary Antonia Yulo Loyzaga said in an interview on Monday.
  • The nickel market backdrop remains complex for many reasons, including: 1) trading on the LME has still not fully normalized after last year’s short squeeze; and 2) physical markets are increasingly fragmented. The LME confirmed that recent volatility had been driven by large, exposed short positions, the withdrawal of liquidity, margin calls and a rapid risk reduction.[/responsivevoice]

Blockchain and Digital Currencies


  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Render Token, rising 92.86%.
  • Smaller coins led gains among cryptocurrencies Thursday on the back of investor optimism that central banks in the U.S. and Europe will finally ease their aggressive interest-rate hiking. Altcoins, including Ether and Cardano, are climbing north of 2% on Thursday as Bitcoin pares back its strong advance, writes Bloomberg. 
  • The year kicked off with NFT trading volumes giving digital-asset enthusiasts a reason to cheer, writes Bloomberg. For the second consecutive month, transactions grew compared with the previous month. In January, Ethereum NFT marketplaces, led by OpenSea, totaled $796.3 million on a month-on-month increase of 47%.


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was LEO, down 12.62%.
  • MicroStrategy, the enterprise software maker better known as the largest public holder of Bitcoin, registered an eight consecutive quarterly loss after writing down the value of its cryptocurrency holdings. The company had a net loss of $249.7 million in the fourth quarter, according to Bloomberg. 
  • Celebrities are facing lawsuits from investors who suffered losses on virtual assets, as well as scrutiny by regulators from allegedly duping the investing public, writes Bloomberg.


  • The cryptocurrency world has been suffering a crisis of confidence, but that’s not stopping proponents of decentralized finance from going after the $7.2 trillion global currency market, explains Bloomberg. Researchers behind one of the largest DeFi marketplaces are courting traders of fiat currencies, arguing that moving them onto the blockchain would cut the cost of global remittances by 80% and eliminate currency risk.
  • Bitcoin has been oscillating in a tight range for the last two weeks after reaching its highest level since August earlier in the month. The token is on track to register its best January performance since the 51% jump in 2014. There is an important ‘polarity’ level that Bitcoin has mostly respected since the middle of last year, writes Bloomberg.
  • Financial advisers and lawyers welcomed the U.K. government’s plans to regulate the crypto sector, which come amid turmoil in digital asset markets, writes Bloomberg. 


  • A court-appointed examiner blasted crypto lender Celsius Network and its former CEO Alex Mashinsky for lacking adequate risk management and misleading customers about its business practices and financial health. Examiner Shoba Pillay said in her 689-page final report published Tuesday that Celsius lacked the ability to accurately track its assets and liabilities and tried to erase misrepresentations made by Mashinsky in public statements, writes Bloomberg. 
  • U.S. prosecutors in the Justice Department’s fraud unit are looking into Silvergate Capital Corp’s dealings with fallen crypto giants FTX and Alameda Research. The criminal investigation is examining Silvergate’s hosting of accounts tied to Sam Bankman-Fried’s business, writes Bloomberg. 
  • Crypto trading venue Orion Protocol was set to pause operations Thursday after an apparent attacker drained millions of dollars’ worth of cryptocurrency. The attacker deployed a fake token called ATK which was used to manipulate the Orion pools, writes Bloomberg.

Gold Market

This week gold futures closed at $1,878.20, down $67.40 per ounce, or 3.46%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week lower by 5.43%. The S&P/TSX Venture Index came in off just 0.31%. The U.S. Trade-Weighted Dollar rose 1.01%.


  • The best performing precious metal for the week was palladium, up 0.77%, after holding the spot for worst performer in the prior week. Dacian Gold’s second quarter 2023 production of 12,000 ounces was 5% better than consensus, with ore coming entirely from stockpiles following the full suspension of mining. AISC of A$2,099 per ounce was in line with consensus.
  • Turkey was the biggest buyer of gold among central banks last year, with households also rushing to buy the commodity to shield from geopolitical uncertainty and rampant inflation. The central bank’s gold reserves were at the highest level on record, the World Gold Council said in a report on Tuesday. The official figure was 542 tons, up by 148 tons. 
  • Gold rose to a nine-month high after comments from the Federal Reserve suggested its aggressive cycle of rate hikes is coming to an end. Fed Chair Jerome Powell said policymakers expect to deliver a “couple” more interest-rate increases before putting their tightening campaign on hold as the central bank raised its key rate by a quarter point in a widely expected move. The dollar and Treasury yields extended declines on Thursday, pushing gold higher.


  • The worst performing precious metal for the week was silver, down 5.24%. Friday’s release on the change in non-farm payrolls (which rose an unexpected 518,000 in January versus expectations of just 188,000), sent precious metal prices down hard at the end of the week. The strong growth in employment likely means the Fed will not be cutting rates in the latter half of 2023, should this spike have any follow through in the coming weeks.
  • South Africa’s worst ever power blackouts are threatening platinum and palladium supplies, both now and in the years ahead. Outages last year curbed output of the metals, and the power crisis that’s crimping the economy has worsened in recent months. The nation’s platinum-group metals production will likely fall this year, according to Impala Platinum Holdings Ltd.
  • Silver Lake Resources had a weak second quarter result with gold production 11% below consensus and AISC 12% above consensus. Fiscal year 2023 gold sales guidance has been downgraded 3% to 260-275,000 ounces. This is at the lower half of original guidance. Fiscal year 2023 AISC guidance has moved 3% higher to A$1,950-$2,050 per ounce.


  • Yamana Gold’s founder Peter Marrone commented that the gold sector will likely see more M&A as miners look to maintain margins in a higher cost and lower gold grade environment. Per the article: The “gold price today is roughly where it was in late 2020…but interestingly the margins have decreased quite substantially for almost all of the companies,” said Marrone. “It seems to me that we are going into universally lower grades, higher costs, inflationary impacts,” he continued, meaning “any form of consolidation is a smart one.”
  • In November 2022, Morgan Stanley called for gold price support due to slowing rate hikes. The gold price has since rallied and is now trading at the upper bound of the trendline versus 10-year TIPS, but the group’s gold strategists still see potential upside. A regression analysis of the 10-year forecasts implies a gold price of $1,990-$2,200 per ounce. 
  • India’s overall gold demand has remained resilient, witnessing a marginal decline of 2.92% in 2022 at 774 tons notwithstanding a sharp increase in prices, and the outlook for this year looks bullish, the World Gold Council (WGC) said in a report on Tuesday. The overall gold demand in 2021 stood at 797.3 tons, according to the WGC’s annual Gold Demand Trends report.


  • According to BMO, updated mineral reserves and resource estimates for Fortuna Silver’s Yaramoko mine showed a decrease in contained ounces within the 55 Zone open pit area. A spatial discrepancy incorporated in the previous reserve estimate resulted in variation between drill holes, which reduced the amount of gold by 120,000 ounces.
  • The Biden administration is set to ban the dumping of mining waste near Bristol Bay, Alaska, by issuing a decree that thwarts longstanding plans to extract gold, copper and molybdenum in the area because of its potential to harm the region’s thriving sockeye salmon industry.
  • Hochschild Mining reported light fourth quarter production. Silver production was -6% versus consensus. Gold production was light versus consensus as well. Full year 2022 production marginally was below guidance due to significant local and national disruptions in Peru and associated logistical challenges.

Impala Platinum Holdings

Silver Lake Resources

Yamana Gold

Mitsui OSK Lines

Allegiant Gold

American Airlines

Southwest Airlines

FedEx Corp

Louis Vuitton

Hermes International


Compagnie Financière Richemont

Cathay Pacific Airways

Ivanhoe Mines

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.

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