- Macroeconomic rumblings force a closer examination on gold price predictions for 2023.
- Newmont (NEM): Newmont provides a strong yield that may make it attractive through the turmoil.
- Barrick Gold (GOLD): Barrick Gold features a high-quality business that can ride out some storms.
- BHP Group (BHP): BHP Group’s diversified business is attractive at this wild juncture.
- Sibanye Stillwater (SBSW): Sibanye Stillwater’s palladium business adds to its gold operations.
- Wheaton Precious Metals (WPM): Wheaton offers a streaming business model and a stable financial profile.
- Royal Gold (RGLD): Royal Gold offers a mix of streaming and royalty businesses.
- Jaguar Mining (JAGGF): Jaguar Mining is surprisingly stout for a junior miner.
With circumstances continuing to devolve into madness following the onset of the pandemic-fueled new normal, queries regarding gold price predictions for 2023 naturally picked up. Historically, precious metals offer a hedge against currency erosion since they feature intrinsic value. That’s part of the reason why I personally own some physical gold. As well, the metals cynically benefit from the fear trade or broader concerns about economic and perhaps societal instability.
Still, the issue about gold price predictions center on the Federal Reserve and its monetary policy. Unfortunately, the Fed fights against macroeconomic dynamics such as rising energy costs, geopolitical flashpoints and a stout labor market, among other factors. Certainly, the Fed succeeded in introducing countervailing deflationary forces, as judged by the rise in purchasing power in July. However, inflationary forces again dominated in September.
Therefore, no easy answer exists regarding gold price predictions for 2023. All eyes are on the Fed, true, but it can only do so much. The macros will almost certainly influence the central bank’s decision on how to proceed. Under this context, I’m going to provide two sets of price predictions depending on which force (inflationary or deflationary) wins out.
A stalwart in the metals mining business, Newmont (NYSE:NEM) is the world’s leading gold company and a producer of copper, silver, zinc and lead, per its website. Currently, the company carries a market cap of $32.99 billion. It also offers a forward yield of 5.32% and commands two years of consecutive dividend increases.
According to Gurufocus.com, Newmont may represent a value trap. Simply, the company cratered after a tough second-quarter earnings report. Presently, shares slipped 32% on a year-to-date basis.
In terms of gold price predictions, if the Fed succeeds in raising the benchmark interest rate to control inflation, NEM may start 2023 well into the $30 range. Technically, a baseline of support exists at around $38, which is the level shares might “de-risk” at.
However, if the macroeconomic forces push inflation higher, NEM could easily retake the $60 level and beyond. Fundamentally, Newmont still carries a decent-quality business, with a return on equity of 3.6% that ranks higher than 78.5% of the competition.
Barrick Gold (GOLD)
Another top name in the gold space, Barrick Gold (NYSE:GOLD) produces the underlying metal and copper with 16 operating sites in 13 countries. Presently, Barrick carries a market cap of $25.9 billion. It also carries a dividend yield of 5.48% at the moment.
As of the moment, Gurufocus.com labels GOLD modestly undervalued. Although Barrick presented some encouraging figures such as increases in gold output, the vagaries of this year hurt shares. Since the beginning of this year, GOLD finds itself 21% below parity.
For gold price predictions, a deflationary dynamic will continue to weigh heavily on the sector. Technically speaking, a support baseline exists around $12 to $13. That’s probably where shares will head if the Fed aggressively raises the benchmark interest rate.
On the other hand, if inflation wins the day, could make a charge back toward the $30 level. Keep in mind that Barrick features a high-quality business. Its return on equity stands at 8.44%, ranked higher than 83% of the competition.
BHP Group (BHP)
For those seeking exposure to gold but not too much exposure, BHP Group (NYSE:BHP) offers a compelling idea. Primarily, the company specializes in copper, iron ore, metallurgical coal, nickel and potash. All of these feature significant applications in industry or agriculture. However, BHP also enjoys exposure to the gold and silver market via its Olympic Dam project.
Financially, BHP rates as a modestly undervalued business. While mining always presents certain risks, because of BHP’s broad portfolio, the company is less exposed to any one commodity. For instance, the security lost only 7.5% so far this year. That’s a win under the present bearish conditions.
For gold price predictions, BHP largely enjoys a neutral position. Again, a wide canvas allows investors to sleep easier at night. To be sure, inflationary forces should help BHP make a charge back up to $70.
On the other hand, deflationary forces may see BHP meander but not lose too much. I say this because the company produces commodities featuring inelastic or critical demand profiles.
Sibanye Stillwater (SBSW)
While risky, investors ought to give some consideration to diversified precious metals miner Sibanye Stillwater (NYSE:SBSW). Per its website, “Sibanye-Stillwater has established itself as one of the world’s largest primary producers of platinum, palladium, and rhodium and is also a top tier gold producer.”
Currently, Sibanye has a market cap of $6.63 billion. Shares slipped over 25% since the beginning of this year, which doesn’t initially offer much encouragement. However, its palladium production should offer a mitigatory effect. Scream all you want about electric vehicles being the future. They are still expensive for many if not most households. Therefore, palladium’s use in catalytic converters should offer much relevance for SBSW.
Of course, the topic of the day is gold price predictions. If circumstances become decisively inflationary, I expect SBSW to eventually return to the $20 threshold. Along with gold, other critical metals like palladium and platinum should rise.
However, even if circumstances become deflationary, SBSW might just meander sideways. First, Sibanye offers critical metals necessary for industrial applications. Second, the company commands stout profitability metrics, reflecting a high-quality enterprise.
Wheaton Precious Metals (WPM)
One of the more reliable market ideas in the gold sector, Wheaton Precious Metals (NYSE:WPM) deploys a streaming business model. Per Motley Fool, streaming refers to “a financial transaction in which a company provides cash up front to a mining company for the right to buy gold at reduced prices in the future.”
Theoretically, streaming companies (all other things being equal) provide greater price predictability than direct mining firms. After all, parties to streaming contracts understand what the terms are prior to entering the agreement. Unfortunately, for WPM this year, this thesis did not pan out so well. Since the beginning of this year, WPM lost 25% of equity value, a not untypical loss.
That said, if gold prices rise due to stronger-than-expected inflationary forces, Wheaton will likely target $50 and above. Undergirding such a framework are robust financials. Anchored by a very stable balance sheet, Wheaton next enjoys strong growth and profitability metrics.
On the other hand, if gold price predictions end up materializing in the southbound direction, WPM may end up dropping to around $26 to $27. That’s where strong technical support lies.
Royal Gold (RGLD)
Billed as one of the world’s leading precious metals stream and royalty companies, Royal Gold (NASDAQ:RGLD) engages in the in the acquisition and management of precious metal streams, royalties and similar production-based interests.
Per the company’s explanation, a royalty is “a non-operating interest in a mining project that provides the right to a percentage of revenue or metal produced from the project after deducting specified costs, if any.” As with streaming companies, royalty-based enterprises facilitate price predictability. In RGLD’s case, the thesis worked out well. Since the beginning of this year, RGLD slipped 11.5%. It’s not great but comparatively, it’s winning.
As for gold price predictions, inflationary tailwinds should bolster RGLD. Incorporating a mix of streaming and royalty business models, RGLD provides concerned investors with convenient exposure to precious metals. Believe me, lugging around bullion is no fun. Look for shares to swing above the psychologically important $140 level.
However, under negative gold price predictions, RGLD risks falling into the $80 range. The hope, though, is that its high-quality business should spare it extreme volatility.
Jaguar Mining (JAGGF)
One of the riskiest ideas within the precious metals sector, Jaguar Mining (OTCMKTS:JAGGF) nevertheless deserves consideration for speculators. A Canadian-listed junior gold mining, development, and exploration company, Jaguar conducts operations in Brazil. Immediately, its share price of a few cents above $2 will discourage many investors. However, let’s look at some facts.
On a YTD basis, JAGGF hemorrhaged 39.4% of equity value. However, let’s recall Newmont, which didn’t pare losses significantly, down a little over 32%. Use Google Finance’s tool to stack the two charts together. Sure, NEM managed to swing higher into the second half of April. But eventually, both NEM and JAGGF succumbed to broader market forces. So, eschewing the junior miners in favor of the blue chips doesn’t always work out successfully.
Regarding gold price predictions, if inflation wins the day, I expect JAGGF shares to fly higher. At minimum, look for shares to double by late 2023 to early 2024 under inflationary conditions. Unlike garbage gold stocks, Jaguar enjoys surprisingly solid financials, including a 14.2% return on equity that ranks higher than 88% of the competition.
Should gold prices succumb to deflationary pressures, though, I believe JAGGF risks a trip to $1, if not worse. So, all I can say is, play ball!
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.