Uncertainty, Recession Potential, Metals Outlook: PDAC 2022, Day 1
The annual convention of the Prospectors and Developers Association of Canada (PDAC) is now underway after being postponed from its original March date due to pandemic restrictions.
The three-day event, which takes place at the Metro Toronto Convention Center from June 13-15, returned to its usual in-person format after the 2021 conference was held entirely online; a digital component will follow from June 28 to 29.
Despite the noble efforts of PDAC organizers, registration delays for the event resulted in massive queues and bottlenecks on the first day; they were resolved at noon.
Sentiment at this year’s event is mixed, with most investors concerned about rising inflation, the possibility of a recession and economic policy. With prices for many commodities high due to supply chain difficulties, war and rising demand, falling stock markets have eroded investor confidence and heightened risk aversion. .
This was highlighted in the first of the technical presentations, an outlook and review of the mineral exploration sector by Mark Ferguson, director of research and head of mining studies at S&P Global.
During his remarks, Ferguson noted that 2021 has seen significant increases in exploration budgets, which topped US$11.2 billion in 2021, with 200 additional companies entering the sector.
Unfortunately, 2022 has not seen the same growth in exploration funding due to market volatility.
Despite the current funding challenges, Ferguson said the market capitalization of the entire mining sector is up, currently standing at US$2.5 billion. He expects mining budgets to increase by 5-15% this year, with gold and copper exploration the main driver.
Despite the positive outlook, uncertainty was a recurring theme during the first day of the conference, and was highlighted by Nicky Shiels of MKS PAMP, during his presentation.
Focusing on precious metals, primarily gold, Shiels noted that the yellow metal outperformed tech and crypto by 30%. She also expects to see some rotation of energy into gold as gold’s appeal as an inflation hedge grows.
In terms of price, Shiels acknowledged that price prediction is especially difficult now because the future price of gold is highly dependent on the measures used by the Federal Reserve to stifle inflation.
We’ll hear more about the impact of the Fed’s decisions on gold prices later this week when the Federal Reserve’s Open Markets Committee meets on June 14-15 and attempts to steer the economy toward a soft landing.
Be sure to check back tomorrow for more PDAC coverage, and don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Georgia Williams, have no direct investment interests in any of the companies mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or completeness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the views of Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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