Investor Alert

Fund Managers Are Betting on China Stocks and Commodities as the Country Reopens

Author: Frank Holmes
Date Posted: January 20, 2023 Read time: 41 min

This week I’ve been attending the 26th Annual CIBC Western Institutional Investor Conference in Whistler, British Columbia. It’s the first time in three years that we’ve been able to meet in person, which is great because Zoom fatigue is real, and research shows that human brains need face-to-face interaction.

The view in Whistler is spectacular, and although it’s one of North America’s premiere ski towns, I’ve been busy catching up with old friends, meeting new management teams and getting updates from energy companies and top gold royalty names. Among those that were also in attendance were Franco-Nevada, Royal Gold, Wheaton Precious Metals and Osisko Mining.

Interestingly, there were many discussions on artificial intelligence (AI) and, more specifically, ChatGPT. You may have already heard of it. Created by the tech startup OpenAI, ChatGPT is a free, open-source chatbot that generates startingly human responses.

Investors and business leaders are already looking into ways to use the technology, including business strategy, quantitative research and trading.

The future will be dominated by AI, and big tech firms are jockeying to get ahead of their peers. Microsoft recently announced a $10 billion investment in OpenAI. As the saying goes, you are either the disrupter, or you’re being disrupted.   

Fund Managers Betting Big On China’s Reopening

This weekend marks the start of the year of the Water Rabbit, based on the Chinese lunar calendar. The combination of the rabbit and yin water “bodes well for a calmer 2023 compared to last year’s tumultuous experience,” writes CLSA in its annual Feng Shui Index.

Deutsche Bank, meanwhile, believes 2023 “will be a year of transition toward more normalcy after the bust and boom pattern of the last few years.”

Whether true or not, global fund managers are betting that China region stocks and commodities will have a strong year as the world’s second-largest economy gradually reopens after three long years in lockdown.

A January survey conducted by Bank of America shows that 91% of money managers believe China will “fully reopen” in 2023. That’s a significant increase from December 2022. Growth expectations for the country are also at a 17-year high.

Shares of Chinese companies are forecast to beat their emerging market peers in 2023, with Morgan Stanley calling for returns of 10% and Citi Global Wealth Investments seeing 20%.

This is expected to lift equities in surrounding Asian markets, including exporters such as South Korea and Taiwan as well as popular Chinese tourist destinations such as Thailand and Indonesia.

Take a look below. Hong Kong-listed stocks have surged 37.5% over the past three months, compared to the S&P 500, up 7.7%, in response to reopening optimism. Among the best performers in the Hang Seng Composite Index are Macau-based travel and casino stocks, including MGM China, up 196% over the same period, and Wynn Macau, up 170%.

100% Increase In Chinese Chunyun Travelers Over Last Year

Travel stocks, including airlines, are indeed soaring right now on reopening hopes and the lifting of Covid-era quarantine and testing policies. That’s particularly true of Asian airlines as Chunyun swings back into action for the first time since the start of the pandemic.

Chunyun, or Spring Festival, is the 40-day Chinese travel period that’s believed to be the largest annual human migration in history. More than 2 billion passenger trips by air, road and rail are estimated to be taken this season, double the number from last year, but still 70% of the pre-pandemic level in 2019, according to China’s Ministry of Transport.

To prepare for the extra influx of commercial air travelers, the Civil Aviation Administration of China (CAAC) has approved more than 10,000 extra flights, including some 3,500 serving Beijing, Shanghai and Guangzhou.

According to Group, China’s largest online travel agency, flight bookings for the Lunar New Year are up 15% compared to last year, while scheduled inbound flights during the first quarter have increased around 150% versus the same quarter a year ago.

Speaking this week in Davos, Switzerland, CEO Jane Sun said that leisure travel in China now exceeds 2019 levels and that total commercial aviation capacity would return to normal by the third quarter of this year.

Key Metals And Commodities Responding Positively

For years, China has been the world’s largest consumer of a number of metals and commodities, including steel, iron ore, lead, copper, crude oil and much more. With the country’s reopening, many producers and investors are positioning to catch the next potential wave.

For example, BHP, the world’s largest miner, reported record iron ore output in the six-month period through December 31, as it predicts China’s economic reopening will drive up metals demand. The company produced 132 million tons of iron ore during the period, and it says it will boost its production of copper and nickel.

Dr. Copper, so named because the metal’s price action has often reflected the health of the economy, has advanced on expectations of stronger demand from China and tight global supply.

From its 52-week low in July, the metal has risen approximately 30% and is now trading above $9,300 per ton; in addition, its 50-day moving average has crossed above the 200-day moving average for the first time in roughly a year, signaling a bullish “golden cross.”

Copper, nickel, lithium and other vital metals are primed for growth due to the ongoing clean-energy transition. The latest estimate by Bloomberg New Energy Finance says that the global energy industry will need $6 trillion of metals over the next three decades to meet the zero-carbon mandates governments already have in place.

Index Summary

  • The major market indices finished mixed this week. The Dow Jones Industrial Average lost 2.70%. The S&P 500 Stock Index fell 0.82%, while the Nasdaq Composite climbed 0.55%. The Russell 2000 small capitalization index lost 1.32% this week.
  • The Hang Seng Composite gained 1.59% this week; while Taiwan was up 0.73% and the KOSPI rose 0.38%.
  • The 10-year Treasury bond yield fell 2 basis points to 3.481%.

Airlines And Shipping


  • The best performing airline stock for the week was Turkish Air, up 13.5%. American Airlines provided its fourth quarter 2022 guidance update with the new earnings per share (EPS) guide of $1.12-$1.17, well above consensus. This was driven by a better top line with capacity coming in at the midpoint of the prior guide. United Airlines reported adjusted EPS of $2.46, sailing past the Street consensus estimates of $2.06, respectively, and the high-end of $2.25 guidance provided during third quarter earnings.
  • The green transformation of shipping was clearly reflected in the ship types commissioned by shipowners and carriers during 2022, writes Clarksons Research. Although total orders at shipyards declined by 20% in 2022 compared to the previous year, ship order values increased by 6%, partly because more complex vessels were commissioned, and partly because shipowners and carriers increased investments in alternative fuel ships.
  • Delta Air Lines reported adjusted EPS of $1.48 for the December quarter, better than FactSet’s consensus of $1.32. The beat versus consensus was primarily due to better-than-expected revenue. The focus now will be on the March quarter outlook, which is light of expectations as the company now includes an estimate for a new pilot contract.


  • The worst performing airline stock for the week was Hawaiian Air, down 7.6%. According to the Wall St. Journal, a recent outage of the FAA’s notice to air missions system caused an estimated 1,300 flights to be cancelled and more than 9,700 flights delayed. The FAA’s notice to air missions system provides critical safety information to pilots and the preliminary investigation traces the outage to a damaged database file. The FAA has been working to overhaul the system, but this is not expected to be complete for about two more years.
  • Container shipping supply pressure is intensifying into 2023-2024. New orders are still being made and scheduled deliveries are seeing no material delays. Scrapping is not expected to surge materially as many older ships have completed their classification surveys and are able to continue trading.
  • Late last week, a group of Democratic Senators wrote a letter to Southwest CEO Bob Jordan addressing topics such as the company’s flight-crew scheduling system, ticket refunds, and executive compensation. The letter also posed several questions about the daily cancellations, software system details, investments in technology, and more. The Senators noted that on December 23, airlines flying into or departing from the United States cancelled 5,934 flights, but as the storm passed over the next few days, almost all other airlines were able to return to their regular schedule.


  • CASA issued an Air Operators Certificate (AOC) to Bonza yesterday. An AOC is the regulatory approval required to fly scheduled passenger-carrying flights in Australia. It is understood that Bonza submitted its application last year and “went through a rigorous assessment and validation process to ensure it could operate safely.” Bonza CEO Tim Jordan expects tickets to go on sale in the coming days with flights to follow shortly thereafter.
  • Morgan Stanley is turning more bullish on tankers. The group notes the supply side has improved, while demand will be supported by China’s higher fuel consumption after reopening and increasing fuel exports in 2023. Morgan Stanley stays constructive on dry bulkers and expects demand to bottom out in the second quarter of 2023, supported by China’s higher infrastructure spending.
  • UBS still sees an upside to the share price of Wizz and highlights things such as upside consensus pressure to the fall in fuel (the company has only hedged 28% of March 24 fuel requirement. In addition, UBS notes a strong roll-out story with Middle Eastern markets representing an opportunity and supply discipline aiding in pricing.


  • Delta shares underperformed as its first quarter 2023 EPS outlook of $0.15-0.40 was lower than Street’s $0.57 (and many investor expectations of $0.40) due to higher first quarter unit costs. Delta is now one of the few airlines (along with Alaska) that has a fully baked 2023 cost structure based on new labor agreements, which allows investors to now focus on the airline’s revenue and free cash flow story in 2023.
  • Bank of America hosted the world’s leading container expert Huajoo Tan of Linerlytica to discuss the outlook for container shipping and supply chains in 2023. Mr. Tan believes container freight rates are heading back to pre-Covid levels given intensifying supply pressures and elusive carrier discipline. He sees downside risks to rates building into the post CNY slack season and believes higher fixed costs and stronger balance sheets could lead to a prolonged price war and potentially deeper losses. And while a U.S. restock could come at some stage in 2023, Mr. Tan notes restocking demand depends on retail demand and the 2009-2010 restocking cycles show no big month-over-month inventory moves higher.
  • U.S. and European airlines will benefit from pent-up demand for travel to China after its recent border reopening, but route approvals, fresh Covid testing rules and not enough large aircraft, remain barriers to rising sales, analysts and industry officials say.

Emerging Markets


  • The best performing country in emerging Europe for the week was Turkey, gaining 10.1%. The best performing country in Asia this week was Indonesia, gaining 10.1%.
  • The Hungarian forint was the best performing currency in emerging Europe this week, gaining 0.70%. The Malaysian ringgit was the best performing currency in Asia this week, gaining 0.90%.
  • China released stronger-than-expected fourth quarter economic data. Gross domestic product expanded 2.9% year-over-year, above consensuses expectations of 1.6%. December industrial production rose 1.3% year-over-year versus consensus of 0.20%. Retail sales fell 1.8% year-over-year while a sharper drop of 9.0% was expected. The unemployment rate dropped to 5.5% from 5.7% versus consensus forecast of 5.8%.


  • The worst performing country in emerging Europe for the week was Russia, losing 1.5%. The worst performing country in Asia this week was Thailand, losing 0.3%.
  • The Polish zloty was the worst performing currency in emerging Europe this week, losing 0.4%. The Chinese renminbi was the worst performing currency in Asia this week, losing 1.2%.
  • Turkey announced a date during which the country will hold its Presidential elections, although the opposition candidate is still not known to the public. Turkey’s six-party opposition alliance is set to provide its presidential candidate that will challenge President Tayyip Erdogan’s 20-year rule next month, just a few months before elections, scheduled for May 14.


  • China’s economy grew at the second-slowest pace since the 1970s in 2022, but many economists predict that the economy has reached a bottom in the fourth quarter of last year. After China reported stronger-than-expected fourth quarter economic data, Deutsche Bank increased the country’s GDP growth forecast to 6% from 4.5% in 2023, and Goldman Sachs upgraded its forecast to 5.5% from 5.2%. The Chinese economy may recover quicker than expected.
  • Russians have purchased a record 16,312 homes in Turkey in 2022, according to data released on Tuesday by the Turkish Statistical Institute. This represents a 203% increase from 2021, accounting for almost a quarter of all sales to foreigners. Many European countries restricted Russians from entry and cut down on business activities with the aggressor, however, Turkey kept its borders open and continues its bilateral cooperation with Russia.
  • Germany’s ZEW survey of economic sentiment for January posted its fourth consecutive increase, reaching the first positive print for headline data since early February 2022. The biggest driver has been the more favorable energy market and expectations that inflation will continue to fall. The Eurozone inflation dropped from its October peak of 10.6% to 9.2% in December.


  • As expected, China’s population fell in 2022 by 850,000 to 1.41 billion. Last year, 9.56 million births were recorded versus 10.62 million in the prior year, offset by 10.41 deaths from around an average of 10 million in recent years. The population decline may continue to negatively impact the property market, which is already under pressure due to Covid restrictions in the past three years and economic activity slowing down.
  • Health consultancy Airfinity said China is likely to see 36,000 Covid deaths per day during the upcoming Lunar New Year holiday, up from its previous forecast of 11,000 per day. Daily new cases could peak at 4.8 million with 62 million total infections across the final two weeks of January. The update is based on fresh provincial data combined with a comparison against infection rates seen in other countries after they first lift restrictions.
  • Russia is planning to expand armed forces over the next few years, aiming to reach 1.5 million soldiers by 2026. The expansion of the armed forces, initially announced in December, will occur over several years, from 2023 to 2026, according to the Russian state-run news agency TASS. Russia had previously ordered a troop increase from 137,000 to 1.15 million in August.

Energy And Natural Resources


  • The best performing commodity for the week was nickel, rising 9.59%. SLB, the oilfield services company based in Houston in Paris, reported a fourth-quarter profit excluding certain items of 71 cents per share, (higher than the average analyst estimate in a Bloomberg survey). Net income of $1 billion marked its best three-month performance since the second quarter of 2015. The company’s CEO noted a positive outlook with activity accelerating in major international basins with favorable pricing for equipment and services, reports Bloomberg.
  • After mixed price action at the start of the year, base metals prices have broken out higher in recent weeks. Copper, aluminum, and zinc prices are up 11.1%, 8.1% and 15.7% year-to-date, respectively. Copper markets are tight from protests in Peru, blocking the export of its copper which is nearly 2% of global production. LME holdings of zinc have dropped to less than 20,000 tons, the lowest level since 1986, as reported by Bloomberg.
  • Oil prices will mark a second weekly gain with improved optimism over increased demand from China, reports Bloomberg. The wave of Covid infections has not deterred demand, it appears. Forecasts now imply record consumption in China and a buying spree from the country’s largest oil trader before the Lunar New Year.


  • The worst performing commodity for the week was natural gas, dropping 8.89%. Energy prices on both sides of the Atlantic have started the new year sharply lower as warm winter weather upended heating demand. Since the start of the year, natural gas prices collapsed by over 25% in both Europe and the U.S., while oil prices are now flat.
  • China’s December net steel exports drifted slightly, falling by 3% month-over-month, and annualizing 56 million tons (up 17% year-over-year), marginally above the fiscal year 2022 forecasted run-rate of 54 million tons. Nonetheless, a still-declining domestic output, and rising prospects of a consumption recovery as China reopens, might indicate more sequential declines ahead.
  • Chinese lithium prices dropped 3-5% this week with ongoing demand weakness from downstream consumers who continue to cut production (a trend that started in late November and is expected to continue until the end of Chinese New Year celebrations). Global markets are also being impacted by this softer sentiment, evidenced by price declines of 1% in Europe and the U.S.


  • According to Stifel, as oil prices swung from extreme lows to extreme highs before backing off in the second half of 2022, the “easy money” was made on oil and gas producer equities. And yet, even though cost inflation has recently returned, Stifel continues to see significant value in these equities, broadly speaking. The group believes many of these names boast multi-decade high quality drilling inventories, while their equity valuations imply free cash flow yields well north of 10% at strip prices.
  • Bloomberg New Energy Finance estimated in its first Transition Metals Outlook that the world’s shift to cleaner energy will require $6 trillion worth of metals over the next three decades, which would be a five-fold growth factor from today. Metals such as lithium, copper, nickel, and a host of other rarer metals will be needed for power generation, stationary battery storage, power grids and the transport sector. The recently passed Bipartisan Infrastructure Law created incentives for these materials to be developed domestically or sourced from reliable trading partners.
  • The range-bound aluminum price environment seen over the past six months, which has reflected a fundamental stand-off between European destocking-led softness and recovering China demand-led tightness, is set to draw to an end over the first quarter this year. From the end of the quarter, the aluminum market may transition back toward a substantive global primary metal deficit. This is being driven by increments in the China market rooted in a significant upgrade to the demand trajectory and increased winter supply cuts.


  • Since the beginning of December, the natural gas futures strip has declined by 36%; $3.69 per MMBtu from $5.72 per MMBtu. The market is approximately 1.2 Bcf/day oversupplied in 2023, with the overall market loosening by 2.9 Bcf/day on a year-over-year basis.
  • Broadly, the upcoming fourth quarter 2022 season for steel equities should reflect a sequential decline in earnings, given a combination of lower price realizations, still-elevated cost pressures and some instances of lower production expectations for the quarter. Investor focus should be centered around: 1) the demand outlook and shipment expectations for construction (non-residential and infrastructure) and autos, given easing chip shortage pressures, 2) pricing outlook given recently announced price hikes across flat-rolled products in the U.S., and 3) views around potential for conversion cost pressures to ease into 2023.
  • The breakneck rally in base metals and mining stocks could hit a major speed bump as copper and iron ore retreat, Citi warns. Mining stocks have soared to start the year as copper and iron ore prices leaped on optimism that China’s economy is re-opening after a prolonged period of strict virus controls.

Luxury Goods


  • This week, on January 18, LVMH Moet Hennessey Louis Vuitton, the largest luxury company by market capitalization, hit a record high at $865.73. Champagne sales topped €6 billion ($6.5 billion) for the first time last year as exports outside France surged. LVMH has a stable of brands including Dom Perignon, Moët & Chandon, Ruinart, and Veuve Clicquot. The company will report earnings on January 26.
  • According to FactSet, 2.1 billion trips are expected during the Lunar New Year holiday in Asia, twice the number from last year. In addition, Bloomberg reported around 60% of Chinese travelers are planning an overseas trip this year.
  • Seoul Auction Corporation, a South Korean company which trades paintings, was the best performing S&P Global Luxury stock for the week, gaining 26.68%. Shares gained 17.7% in a single day on Friday, but no new news was reported by Bloomberg.


  • U.S. retail sales fell a more-than-expected 1.1% in December, almost twice the pace of November’s decline. The biggest drop was reported in motor vehicle purchases. Most economists expect the U.S. economy will slip into recession by the second half of 2023.
  • China, the world’s second largest economy, reported this week that its population shrank last year by 850,000. In 2022, 9.56 million births were recorded versus 10.41 million deaths. A new report showed that China’s new birth rate could fall to a third of India’s by 2050 without fertility support.
  • Nio Inc., a Chinese electric vehicle (EV) carmaker and distributor, was the worst performing S&P Global Luxury stock for the week, losing 6.1%. According to a survey of 500 customers in China, 76% of Chinese EV buyers are considering buying Nio’s competitor Tesla in 2023. BYD took second place in the survey and Nio took third.


  • Chief executive John Lee announced Thursday that Hong Kong residents who test positive for Covid will not have to isolate starting January 30. In the past, many residents had to be sent to a hospital or government run facility, even when their symptoms were mild. The one requirement remaining will be to wear a mask unless exercising.
  • British fashion house Burberry Group PLC and Cartier-owned Cie. Financière Richemont SA said sales to Chinese shoppers are starting to pick up, an early sign of recovery in the market, Bloomberg reports. Burberry is more exposed to China than most companies. Before the pandemic, Burberry made 40% of its sales to Chinese shoppers. Consulting firm Bain & Co. expects Chinese spending on luxury goods to recover in the second half of this year.
  • Luxury shoppers are getting wealthier and younger, with purchases by some of the newest consumers expected to grow three times faster than older generations over the decade. Generation Y (also called millennials, born between 1981 -1996) and Generation Z (born between 1997-2012) accounted for all of the luxury market’s growth last year, according to a report from Bain & Corporation. By 2030, spending by Generation Z and even younger Generation Alpha (born after 2010) is expected to make up a third of the luxury market.


  • The National Economic Development Authority (Neda) in the Philippines supports the proposal to impose taxes on luxury items. Currently, a 20% tax is imposed on jewelry, perfume, and yachts in accordance with Section 150 of the Tax Code. Hiking taxes for the rich can raise additional government revenue of $3.8 billion a year.
  • Sales of the most expensive houses in New York City declined in the second half of last year. Brokers and analysts say they don’t expect a turnround anytime soon, citing disappointing bonus season on Wall Street and high interest rates.  New York’s luxury housing market sales last year ranked fifth over the past decade, in terms of contracts signed, but 64% of those transactions occurred in the first half of the year, with activity slowing significantly over the last six months.
  • Our technical indicator seen below, an oscillator chart based on 60-day price change over the past five years, shows that luxury stocks are in overbought territory currently. A correction is expected in the short term, however, following strong performance over the past few months.

Blockchain And Digital Currencies


  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Frax Share, rising 52.68%.
  • Bitcoin is starting the year on a strong note, seemingly shaking off any negative sentiment it was mired in last year and on the verge of its longest winning streak in nearly a decade. Bitcoin was little changed after rising for 13 straight days, which added more than 25%, to trade above $21,000, writes Bloomberg.
  • FTX’s controversial FTT token surged by more than 40% after the bankrupt company’s new CEO John J. Ray said that he’s exploring the possibility of restarting the crypto exchange. A relaunch is one option under consideration as Ray works to return money to FTX’s customers, writes Bloomberg.


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was Trust Wallet, down 3.46%.
  • Silvergate Capital Corp. reported a $1 billion loss and said it would offboard some non-core digital asset customers following a quarter that saw a dramatic drawdown in deposits after the collapse of Sam Bankman Fried’s FTX. The bank said the losses stemmed mainly from assets sales it was forced to make following the unraveling of the crypto exchange, writes Bloomberg.
  • Bitcoin fell for the first time in about two weeks, snapping a string of gains that had provided some comfort to advocates of digital assets in the wake of last year’s market meltdown. Bitcoin fell as much as 4.2% to $20,412 on Wednesday, writes Bloomberg.


  • HashKey Capital has raised $500 million to create one of Asia’s biggest crypto investment pools, betting on a rebound in the industry still reeling from the collapse of FTX. HashKey’s latest fund will invest in blockchain infrastructure and applications that have potential for mass adoption, writes Bloomberg, with money from investors including sovereign wealth funds, family offices and high-net-worth individuals.
  • Former FTX U.S. president Brett Harrison has raised $5 million for a new crypto software startup from investors such as Coinbase Ventures and Circle Ventures as he tries to move past his association with Sam Bankman-Fried’s failed digital-asset exchange. The venture, Architect, will build trading software to make centralized and decentralized crypto markets easier to use for large investors like institutions, writes Bloomberg.
  • Charles Hoskinson, co-founder of the Cardano blockchain, said that he is considering buying crypto news service CoinDesk to revamp it into a mix of a news and community site. CoinDesk said Wednesday that it engaged Lazard as a financial adviser to explore options including a partial or full sale. The site is owned by Digital Currency Group, a conglomerate whose lending subsidiary Genesis filed for bankruptcy, writes Bloomberg.


  • OSL, a digital-assets platform backed by Fidelity International, is cutting costs by about a third as turbulence in crypto markets continues to reverberate throughout the industry. The decision to cut costs was made in response to “current market conditions,” writes Bloomberg.
  • A Russian national was charged with money laundering in connection with a cryptocurrency operation that allowed criminals to mask the proceeds of illegal gambling and drug deals valued at $700 million. Anatoly Legkodymov, founder of crypto exchange Bitzlato, was arrested Tuesday in Miami, the U.S. Justice Department said at a press conference Wednesday. Bitzlato was a critical financial resource for the Hydra dark web market, writes Bloomberg.
  • Cryptocurrency lender Genesis Global Holdco filed for bankruptcy, the latest firm to collapse in the aftermath of FTX’s swift downfall. The company filed for Chapter 11 protection on Thursday in the Southern District of New York, writes Bloomberg.
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Gold Market

This week gold futures closed at $1,945.40, up $6.90 per ounce, or 0.36%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week lower by 0.38%. The S&P/TSX Venture Index came in up 1.41%. The U.S. Trade-Weighted Dollar fell 0.32%.


  • The best performing precious metal for the week was gold, up 0.36%. Silver has continued to outperform gold, up 10% over the last three months driving the gold/silver ratio down to 80:1, closer to the historical average (76:1). Precious metals prices have seen a lift from a lower U.S. dollar, moderating real rates, and more dovish indications from central banks. Gold snapped three days of declines, reports Bloomberg, as U.S. data gave a mixed picture of the economy, providing little clarity on the outlook for Federal Reserve rate hikes.
  • Orla Mining reported fourth quarter 2022 production of 32,000 ounces, 11% above the 29,000-ounce estimate. AISC guidance of $600-$700 per ounce for 2022 was maintained. In addition, the company provided 2023 guidance, with a production range of 100,000–110,000 ounces, in line with the 105,000-ounce estimate.
  • IAG Gold announced fourth quarter 2022 production of 185,000 ounces versus consensus of 166,000 ounces. Sales were 183,000 ounces versus consensus of 163,000 ounces. For 2022, production of 713,000 ounces was higher than the 650,000–705,000-ounce guidance range. IAG reiterated that costs for the year are expected to be at the lower end of 2022 guidance ranges.


  • The worst performing precious metal for the week was palladium, down 3.21%. El Dorado Gold (ELD) announced fourth-quarter gold production of 128,500 ounces, which resulted in full-year production missing guidance at 453,900 ounces. Weaker-than-expected performance at Kisladag (Turkey) and Olympias (Greece) ultimately led to the production miss, although it was somewhat offset by a strong fourth quarter at Lamaque (Canada).
  • According to BMO, Petra Diamonds announced the first half 2023 operational results with diamond production missing estimates due to group-wide operational challenges. The company has also revised guidance downward for fiscal year 2023 and fiscal year 2024, while fiscal year 2025 guidance remains unchanged.
  • Barrick Gold reported attributable gold production 1,120 thousand ounces, below Visible Alpha consensus expectation of 1,162 thousand ounces and attributable sales 1,111 thousand ounces, below consensus of 1,195 thousand ounces.


  • Canaccord Genuity Technical analyst Javed Mirza noted that Kinross Gold has a very strong value factor score on his proprietary quantitative model, Quest, reinforcing the attractive valuation at current levels. In addition, the stock has scored a multi-week close above a key technical level at the 40-week moving average, currently 5.22. This confirms the intermediate-term trend is now up, a strong technical positive.
  • Dundee Precious Metals announced an updated mineral reserve estimate and mine plan for Ada Tepe, Bulgaria. Ada Tepe accounts for 34% of the company’s gold production (2022 estimate) and 25% of base-case asset NPV. The LOM plan resulted in additional gold production of 66,000 ounces (versus the 2020 mine plan) over the remaining mine life until 2026, thus improving the asset’s cash flow.
  • RBC views potential for more robust M&A activity in 2023 following a muted year, particularly if recent strength is sustained. Since 1990, historical M&A activity has shown a relatively strong correlation (0.50) with the gold price, suggesting that companies are more willing to transact in a positive price environment.


  • According to RBC, gold sentiment has quickly shifted with recent outperformance backed by robust precious metal fund flows totaling over $8 billion in December amidst a broader commodity sell-off. RBC remains cautious given the risk that higher levels are fully priced into recent equity outperformance and look to whether flows will continue to support the move beyond the current seasonally strong period.
  • Mining company Lucara Diamond has called on the European Union (EU) to impose sanctions on Russian diamonds after the bloc reversed plans to hit gemstone exports.  Eira Thomas, chief executive of the Canadian mining group that operates mainly in Botswana, told the Financial Times her personal view was that diamonds of Russian origin “should be sanctioned.”
  • While operating and cost risks may well have subsided from mid-2023, recent stock price appreciation is adding downside risk through the second quarter reporting period. While this does bring the golds in-line with historical norms of >1x multiples, given sharp stock appreciations, there are heightened short-term downside risks for any weak second quarter results.

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Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (12/30/22):

Barrick Gold Corp.

Lucara Diamond Corp.

Dundee Precious Metals

American Airlines

United Airlines

Delta Air Lines

Southwest Airlines

Wizz Air Holdings

LVMH Moet Hennessey Louis Vuitton

Burberry Group PLC

MGM China Holdings Ltd.

Wynn Macau Ltd. Group Ltd.


Royal Gold

Wheaton Precious Metals


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

The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index.

The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months. The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange. The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges.

The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The S&P/TSX Venture Composite Index is a broad market indicator for the Canadian venture capital market. The index is market capitalization weighted and, at its inception, included 531 companies. A quarterly revision process is used to remove companies that comprise less than 0.05% of the weight of the index, and add companies whose weight, when included, will be greater than 0.05% of the index.

The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500. The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500. The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period. The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500. The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500. The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500. The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500. The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500. The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500. The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500.The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

The S&P Global Luxury Index is comprised of 80 of the largest publicly traded companies engaged in the production or distribution of luxury goods or the provision of luxury services that meet specific investibility requirements.

The Bloomberg Commodity Index (BCOM) is a broadly diversified commodity price index distributed by Bloomberg Index Services Limited.

In Germany, the ZEW Economic Sentiment Index measures the level of optimism that analysts have about the expected economic developments over the next 6 months.