I see such an opportunity in gold and silver mining equities as we head into the third quarter of 2022.
As such, the two monetary metals have taken a beating in the past two months as the US Federal Reserve (Fed) promised more and more hikes while simultaneously insisting that inflation will come down due to such policy moves. The associated gold and silver miners have capitulated, and longer-term investors have fled. They are now back at career-low sentiment levels, with even the highest quality gold and silver miners and development assets trading on bargain basement-low NAV multiples. Gold and silver miners are now trading down 50% from their peak of August 2020 and are at levels last seen when gold was trading below $1400/oz. We have seen one of the worst quarters in recent memory for this volatile asset class, but a major policy error and subsequent pivot do look close to hand. When the Fed does pivot from hawkish to dovish these unloved equities may be a primary beneficiary of such a change. What is more, the $Gold price still lies within shooting distance of all-time highs, something that may kick into gear a genuine wider generalist move towards, rather than away from, this sub-sector.
- Firstly, gold prices measured in GBP/EUR/JPY have already broken out into a new higher trading range, and only $Gold continues to lag and is waiting for confirmation. This of course is a function of dollar strength in global F/X markets.
- Secondly, and more importantly for the wider sector, in April of this year, this aforementioned and crucial $Gold price fell below that key technical level of $2100 for the third time since 1980. Because the $Gold has remained below its inflation-adjusted high of $2100 for 40+ years, since 1980, gold investors are the only ones who can say that they have never seen a genuine bull market in their investing careers. This is even more true for gold and silver mining equities, which are flow sensitive and need new participants to move with force.
The value of active minds: independent thinking
Get in touch
A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.
This document is intended for investment professionals* and is not for the use or benefit of other persons, including retail investors, except in Hong Kong. This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. The views expressed are those of the individuals mentioned at the time of writing, are not necessarily those of Jupiter as a whole, and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Holding examples are for illustrative purposes only and are not a recommendation to buy or sell. Issued in the UK by Jupiter Asset Management Limited (JAM), registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. (JAMI), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier. For investors in Hong Kong: Issued by Jupiter Asset Management (Hong Kong) Limited (JAM HK) and has not been reviewed by the Securities and Futures Commission. No part of this document may be reproduced in any manner without the prior permission of JAM/JAMI/JAM HK.
*In Hong Kong, investment professionals refer to Professional Investors as defined under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).and in Singapore, Institutional Investors as defined under Section 304 of the Securities and Futures Act, Chapter 289 of Singapore. 29230