UBS Bullish On Gold, Silver In 2024; Global Mining Supply Market Hits New Highs; South Africa's President Calls For End To Abuses In Mining, Metals Sectors

Top Mining Stories For Feb. 5, 2024:

1. UBS projects a bull market for gold and silver in 2024, thanks largely to the strong likelihood of the Federal Reserve cutting interest rates.

Of the two metals, it’s gold that enjoys a real moment in the sun here. According to the bank’s strategist Joni Teves, gold is likely to reach $2,200 per ounce by the end of the year. The projection does not come totally out of the blue; rather, it follows on the heels of gold having reached a record $2,100 per ounce at the end of 2023.<.p> The UBS analyst attributes the impressive forecast to a weaker dollar resulting from lower interest rates. The projection is highly significant not least because of what it suggests about other alternative assets that have done phenomenally well in the new year, such as Bitcoin.

The popular cryptocurrency hit $45,000 last month and is riding high on a pushback against perceived regulatory overreach and the landmark approval of the spot Bitcoin ETF; yet for all its popularity, nothing can replace the cachet of gold or persuade the market as a whole to gravitate to more speculative asset classes subject to boom-and-bust cycles.

Among financial institutions that track gold’s performance, UBS is not alone in making bullish projections for the commodity. JPMorgan also cited lower interest rates, along with real yields, as factors helping drive gold to new heights.

Gregory Shearer, head of base and precious metals strategy at JPMorgan, said: “Across all metals, we have the highest conviction on a bullish medium-term forecast for both gold and silver over the course of 2024 and into the first half of 2025, though timing on an entry will continue to be critical.”

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2. As gold and other precious metals climb ever higher, the global market for mining equipment grows in tandem. According to a new report from Verified Market Research, the global market, whose value stood at $172.3 billion in 2021, is likely to hit $266.52 billion by 2030, representing a CAGR of 6.43% over the period from 2022 to 2030. Beneficiaries of the trend include such market leaders as Deere & Company DE, Liebherr International AG, Caterpillar CAT and Komatsu America Corp KMTUY.

The report cites a number of factors driving this phenomenal expansion. First and foremost, as global demand for gold and other metals surges, investors and miners aggressively search for “streamlined extraction methods” to get to the bullion and other ores out of the ground in a safe, cost- and time-efficient manner.

Moreover, mining increasingly incorporates such novelties as artificial intelligence, data analytics and automation, which are all the end result of burgeoning global supply chains to which innovative and dynamic manufacturers and distributors are indispensable.

Finally, mining firms are striving to operate in compliance with strict environmental standards, placing additional demands on state-of-the-art technology and gear.

A report from the Business Research Company identifies efficient battery-driven machinery, for both underground and surface use, and one of the most in-demand products pushing the global mining sector to unprecedented levels of prosperity.

Yet another frontier in the ever-growing mining market is exploration and extraction on the ocean’s floor, as deep-sea minerals hold out hope for economically struggling nations such as Nauru in the South Central Pacific.

With its supplies of lime phosphate depleted over the decades and its interior now completely mined out, Nauru has actively sought clearances to mine the ocean floor. But efforts to obtain them have run into considerable controversy, and efforts to finalize rules around mining of polymetallic nodules on the ocean’s floor have failed.

3. South Africa’s President Cyril Ramaphosa, speaking at an annual mining conference in Cape Town on Monday, described mining as central to his nation’s economy, producing 7.5% of its gross domestic product and 60% of all annual export value. Today, 476,000 people work in the mining sector in South Africa, he noted. But his assessment was also sober, as energy shortfalls continue to hamper efforts to power grids 2/47.

This results in the practice known as “load shedding,” whereby South Africans must endure periods of blackout daily to avoid overloading the strained grids.

According to Ramaphosa, illicit mining, and the theft and vandalism of cables transmitting energy, severely undermine the nation’s energy sector as a whole

To Ramaphosa, it is clear that the failure to curb such abuses makes South Africa, a country with abundant natural resources and no dearth of human talent and initiative, less attractive to outside investors than it should be. His eloquent call for reform identified “headwinds” that the Rainbow Nation needs to struggle to overcome in 2024 and beyond.

“We face strong headwinds, and persistent challenges are impeding mine performance. Commodity prices are volatile, energy prices are high. Geopolitical tensions continue to cause enormous challenges and the cost-of-living crisis is playing a role in dampening the business environment,” Ramaphosa said.

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