[Music] I'm Charlotte McLoud with investing news.com and here today with me is Alan Corban he's had of mining at mblo finance and manager of the global golden precious fund thank you so much for being here always great to have you thank you charlot it's always a pleasure to be with you yes I always enjoy our catch UPS and since we are very nearly at the end of 2024 of course we're going to spend some time looking forward at the new year but before we go there I wondered if we could take a quick look


back at gold in 2024 any themes that stood out to you surprises takeaways that you have so 2020 when when we had this interview the same interview a year ago we we uh we strongly believe that gold would uh would hit the 2500 level and for the fundamental reasons that we explain and that we are going again to update the uh uh the viewers the viewers today but basically the scenario is unchanged and we we think that uh there is more room to for for gold to uh to to hit $3,000 uh in in 2025 but backward 202 24 was a very good year for


uh billion for uh physical gold it was uh a very good year for silver uh physical silver um less so for uh platinum and padium but this is a very different topic uh and we're going to focus unless you ask me other questions but we're going to focus on gold and and mainly gold and maybe on the side silver so silver and gold had a great year uh the disappointment came from uh the gold miners and uh and uh when gold uh uh well year to date were up 25 26% uh the the gold miners are up uh if


I look at the major gold minor indices they are up 10% 14% 15% 16% for the silver miners so uh they underperformed uh the uh underlying commodity and this is a disappointment uh but this is year to date but if we had stopped counting uh two months ago uh those those this class of assets had outperformed uh billion and the the the main reason is the inversion of the perception in October October November uh of uh the direction of interest rates with the uh our new US President coming into office in January


and and uh uh the statistics showing that he had significant chances to to be elected president to win those elections the markets starting to shift and they're starting to uh discount what they called the Trump the Trump trade and that Trump trade was about more growth more inflation and uh that induced uh a less uh uh uh uh uh doish monetary policy and this is exactly what the market has been playing over the last the last two months so we are in that honeymoon phase uh that for us is not going to last very long and uh uh uh


even though the Federal Reserve has being uh they were in December very very uh uh sure about their dot plots and the fact that rates would move slightly lower but not much and the inflation would be around 2 and a half% and the growth rate for 2025 of the economy US economy would be around 2.1% well if that's the case uh and we don't believe it's going to be the case but if that's the case rates should stabilize at these levels and this is why we had this consolidation in the price of gold and a consolidation in


gold miners okay I think that's a really good look back at 2024 it gives us a lot of different paths to go down I want to ask you a little bit more about the FED in 2025 because when we had as you said the same conversation last year we talked a lot about the fed and I remember what you had told us is when the FED pauses this is when we have the gold price go up and of course we we had that pause and now we have the FED going down so maybe we can hear a little bit more about what you think is coming from


the FED in 20125 and what that could mean for gold so we should we should always listen to what the FED says and uh uh try to uh put those words in a context of fundamental uh uh data so uh in December let's let's look at what uh uh the chairman of the FED jum Powell said in December he said basically that we are closer to the neutral rate and to say that we are closer to the neutral rate means implies that he's not going to lower rates much more from from the uh current levels and this is what the


market is is is playing the market is positioning for very limited uh interest rates uh cuts in 2025 actually if you look at the statistics of uh uh the Futures what the Futures are telling us is is that basically they think that we will have only 125 basis Bond cut in 2025 so what I'm saying to those who believe in that scenario and there are many many of of them believing in that scenario is that uh we uh in an environment where you have leading indicators who are showing a weaken economy a weakening economy uh


an inverted yield curve that uninverted uh and now is in positive territory uh uh inflation everybody's focusing on the last couple of months the numbers of the last couple of months but the reality is that remember remember that inflation was at 4.5% not long ago less than two years ago we're at 4.5% where were down to 2% now to 2 and a half% and suddenly everybody's uh expecting Resurgence of of inflation we don't we We There is a resilient economy there is a resilient inflation but it


doesn't mean that the economy is not going to weaken there are too many indications too many indications that are showing and to start with the labor market that are showing that demand is going to weaken and if demand weakens therefore growth will weaken and if growth weakens we will have the FED will have to intervene and lower rates much more aggressively than what we are discounting today okay really interesting to go into that and if we take a look a little bit closer at the US economy are you somebody who thinks


that we're heading toward a recession or or what do you see coming in that regard well uh there are some uh uh the fed and uh has has been really focusing a lot on the L labor market lately um and rightfully so and if you look at the job openings uh in the US they those numbers keep keep slowing down and uh I remind you that uh in 2022 that number was at 12 million 12 million job openings in 2022 and we're down to 7 million today the 7 million to put them in context is back to pre uh to a preco


uh uh uh number statistics and back before covid we were trying desperately to have a gross rate above 2% and we had no inflation hardly any inflation and and we believe that we're going back to that normal old normal which was 2% growth and probably some inflation but not much more and we'll need lower rates because today the the nominal rates are at very restrictive levels and and this is what very few people understand you cannot have a 2% gross rate and have restrict a restrict monetary policy and


and this is where uh humbly very humbly I I I find it very strange that we can have uh nominal rates the FED fund rates at 4 and a half% 4.25% and inflation at 2% or two and a half% uh and expect these levels to remain at this as at this level without impacting negatively the econ eony this has never been the case before we don't think in new paradigms that will allow you to evolve with 4% north of 4% the 10e US 10e notes are trading at 4.6% and and and uh very limited growth mind you some growth but very limited so


to to be a little more concise I will say that we we won't call the recession but we definitely are calling for a weaker economy because when the labor market weakens demand weakens and if demand weakens the economy will weaken this is as simple as that and that implies lower rates going going down uh uh uh uh in in the in the next few months at least in 2025 and definitely not uh we are definitely not in the G of those who think that rates will St at these levels we don't okay okay I definitely see what you mean there and


looking a little bit closer at inflation if you had to put a number on where inflation is going in 2025 what would you say because it feels like we're in an interesting scenario you mentioned the FED is FOC focusing Less on inflation right now more on employment we're not at the 2% Target just yet people are definitely feeling inflation I think in their everyday lives and we have Trump coming in lots of questions about if his policies would be inflationary so what are your thoughts there


so uh let's let's spend two seconds on uh Donald Trump and and the an animal spirit uh that that that he represents he was elected the main the main concern of the American people was and the reason why they voted for Donald Trump the main one was inflation it wasn't immigration it was inflation can you imagine a second that this animal spirit will not try to accomplish what he promised on that front I I'm I'm one of those who truly believe that uh he's got this in mind and this President and and the house and


Congress will will try will try to uh to fight uh inflation uh now the actions or uh the promises of the actions are uh tend to demonstrate that those actions could be could trigger more inflation which which implies that maybe those actions will not be put into uh into practice so from wordings to action there's a huge gap and we think that this Administration the future the the January uh Administration will definitely have in mind the fact that the American people want uh uh this Administration to fight inflation and


and and we will and we will have this I I think that this is only time will tell but my belief is that this Administration is definitely the same as the Biden Administration they know that inflation is a main main hurdle obstacle uh and they they have a Target that they need to achieve will they achieve it they will only achieve it through a weakening economy and we believe that we're going to have a weakening e weaker economy and let me remind you one thing uh when when if we look back to the 2016


2020 uh Trump uh uh uh uh mandate uh he is not the one who saved the economy from from the recession in 2019 it was Jerome Powell who saved the American economy from the recession by lowering rates so um you know same recipes will end up with the same results so we do not um believe that those tariffs those uh uh uh um aggressive uh uh uh positions that that the the new Administration will will put in place or will develop uh uh will end up in different results than what we had early in that the previous uh uh presidency so


so we we we look at the numbers the numbers show that Trump uh Trump's policy in two th from 2016 and 2020 uh uh without the intervention of the FED wouldn't have avoided the recession so we're back to the initial uh uh the core of the subject is what will the FED do the FED will lower rates I can tell you that already when the economy is going to weaken and the economy is bound weaken because there are too many indications that show that the bar Market is weakening that the delinquencies I mean you name them there


are 10 million Americans who are now delinquent on their uh student loans um you have car loans uh uh delinquencies where hitting records that we haven't seen in 15 years so the people is suffering the American people is suffering and it's suffering because of inflation maybe but not inflation per se but by higher prices and Charlotte give me one second to explain what higher price why higher prices are different from inflation because we had so much inflation that we that prices have reached levels that are destructive for


uh for the demand it's not about going from a present level to a higher level those levels are already very restrictive and uh conductive of pain for the consumers and this is exactly what what what is happening it's not about inflation it's about prices that are too high already too high for a lot of for most of the American people I think you can I think that's an important distinction to make and you can really see how all the different points that you're talking about come


together so this is all important for gold in 2025 are there any other factors outside the US maybe that you're watching when it comes to gold in this coming year well everybody uh we do but but again uh we know uh and his because history is telling us that the main main uh uh U the key element that you have to uh to look at is the direction of freight now this being said everybody will want to discuss about the uh behaviors of central banks and how uh are they still buying and how much are


they buying uh uh gold uh that's an element the second element is of course people will talk to you about geopolitical risks are they being under rise or not we never believe that the geopolitical risk was a a key element uh uh uh to u to forecast the direction of the price of gold and you have of course the investment demand and the investment demand is basically uh the uh uh the second most timely uh uh uh ingredient to uh to help uh uh uh uh forecast the the direction of of the price of gold and and if you look at


uh those uh uh speculative positions the long and the shorts in the gold market you realize that the shorts are non-existent so don't expect a support from the shorts for the price of gold in the short term because they are non-existent and the long have been uh taking profits uh so technically speaking you had already a 35% uh uh correction uh uh and ideally we could go maybe to 50% but but this will take the price of gold to probably 2500 2550 but it we won't go lower than that so nonsp speculative


positions the future Market the central banks investment demand and and and the direction of of rates because remember one thing the markets don't care about politics they care about the economy uh so uh we can talk about politics as much as we want but I know for a fact that this is not uh a key element to uh that that will uh direct give us a direction for the price of gold I think it really helps me when you put them ranking them in that order so I know that what is most important to you


I think that helps me understand a lot more so this is what we should be watching for gold next year I want to take a little bit of a closer look at the price so when we talked last year You' mentioned that 2500 level and of course we we got past that and at the beginning of this conversation you're talking about getting to the 3,000 level so is that a 2025 story for you or or how is it looking in terms of price yes for us it's definitely a 2025 story we think that the long-term neutral rate is


not at these present levels it is not it's closer to 2 and a half% and that implies that the FED will be more aggressive cutting its rates this is what it implies and uh uh in the meantime uh we will all be watching the data uh on the inflation front because everybody wants to look at inflation to give us a a Direction but also on the labor market and we truly believe that the labor market will be the leading indicator for uh uh uh lower rates ahead of us um and and we see that labor market weakening months after


months on very different fronts and on the labor market front one one more thing you have the government uh uh employ employees and you have the private sector employees and if you look at what happened to the job openings in the private sector you see a continuous decline quarter over quarter over quarter whereas on the government side you had a more or less stable uh uh uh uh rate of uh of openings and this shows how the labor market would have been much weaker had the government the public sector not been uh helping those


data uh uh uh in in that significant uh uh matter so the economy is weaker than what we think uh uh if you look at the profitability of of the this is really not or maybe out of subject but it's important for for the viewers to understand that the S&P 500 is not the American economy uh the American economy is a 5,000 companies and if you look at the top the bottom 3,000 companies more than 40% of them are not profitable more than 40% versus less than 10% for the S&P 500 companies so


the economy is weaker than what we think the labor market would have been weaker without the help of the public sector and inflation is indeed uh uh uh a resilient number but it's not because we have a little bit of inflation we're not talking about three three and a half 4% inflation it's not because we have a little bit of of inflation then that the economy cannot weaken and it will probably weaken much more than what we think but for the time being if we look at the statistics from the uh that


everybody's looking from the uh Federal Reserve of Atlanta we are still at 3% for uh for 2024 so uh we'll see time will tell but we are on in the camp of those who think that uh too many numbers are showing a weakening uh economy that will force the FED to lower its rates and this will be the other uh not the other the only factor that will help gold reach 3,000 in 2025 and and it's a it's a fairly clear picture for us we there are no there are no hurdles to to achieve the this target it's just a


question of of time and uh and and the the picture will be probably much clearer for everybody uh further down down a few months down down into 2025 yeah it does feel like we're in a little bit of a waiting period right now and once we get through the next few months it'll start to become clear just like you said so I'll throw in just a small question about silver since it came up a little bit at the beginning of our conversation so we've got a pretty pretty open pathway for gold to 3,000


where do you see silver in 2025 as you know silver is is more volatile than than gold simply because uh the market is uh much smaller than uh than gold and uh and with silver you always have this industrial fact that gold doesn't have but basically they go hand inand so if gold is going to 3,000 silver will definitely uh do extremely well regardless of the demand that could be affected by a lower economy but a lower economy implies lower rates lower rates imply a market turning very positive for the uh ahead


of us and and and silver will do very well so we are uh extremely uh constructive on Silver because because we are const constructive on gold knowing that silver is much more volatile and something that has really um uh uh attracted my my attention uh yesterday was the jump in shorts of the silver ETF so uh I mean that the the the number of shares uh that were shorted in less than a month uh uh was uh uh that that number doubled in in in a month's time so uh we have a ratio covering ratio of more than two


and a half which is which is not extreme but it's violent and uh we don't like violent moves so expect more volatility even more volatility with silver uh than uh than in the p because of those short positionings that probably will have uh uh a hard time uh settling at at lower prices okay okay extra volatility for for silver and the next little bit so we'll we'll keep an eye out for that and Before I Let You Go of course we want to take a look at the Gold stocks so at the beginning of the


conversation here you mentioned there's some disappointment in 2024 and I remember last year we were talking about gold stocks and you mentioned we were moving from phase one which was about strengthening the balance sheets focusing on profitability into phase two which was more about growth so how is that transition looking to you right now what are what are you seeing there in terms of that it's definitely uh in motion and it has been in motion for the last two years um uh but its growth uh


that is very very well thought um that uh is uh um that is fundamentally uh logical um and I by that I mean we are not growing for the sake of growing we are growing in a clever in a clever way uh we purchase assets that are uh ACC creative and uh we are buying growth that is going to be a creative and we don't uh build uh debt um at the expense of um uh the balance sheet so uh it's it's it's very sensible uh and it's a slow it's in it's really in in the early days I said that


it's the last two two years yes but it's it's it's slowly and very slowly picking up so uh and and when you look look at uh the uh those gold miners what is important uh is is to see how they behave in the sense that what price are they willing to pay to achieve that objective and and in their case the price is very very reasonable in essence it's acreative so I haven't seen one uh uh m&a announcement uh that didn't make sense or couldn't be explained to the shareholders in a uh in in a


constructive way so uh so far so good but it's slow slow motion and uh and and and still very uh uh uh very shy they they are still very shy and because they see their their balance sheet growing up but they are still very confused about the strategy that need to be implemented with that cash that that is being built so uh uh because they remember very well what happened in the past and I can tell you already that two years down the road those emotions they have about what to do with their cash


will have disappeared uh completely but we're not there yet we're not that yet it's it's really the infancy of the of the growth strategy that is being that we see being implemented in the sector yeah I think you're going in the direction where people have a lot of questions right about the gold stocks we've seen of course there's been some companies that have done well this past year but people are really waiting to see those across the board Gaines and all the gold stocks


across their portfolio so not for you is that GNA happen 2025 or that's down the road it it is it is I think it's a it's definitely I mean the the the performance of the majors put aside the new month and the Barrack uh because they each had their uh uh uh uh very very different uh uh uh profiles and um which affected the performance of their uh of their shares uh but globally speaking uh uh the the performance of the gold miners has been extremely eclectic extremely and uh um and a lot of


explorers a lot of developers have been really really have had poor performances and we had disasters actually many disasters announced many disappointments so uh so this uh uh the sector has not performed in a homogeneous way way it hasn't and uh it only performs in a homogeneous uh way at the end at the peak of the cycle so for those who don't know where we stand I can tell them already that we are not at the peak of the cycle we are far from the peak of the cycle and another uh uh uh and maybe


that number people will better grasp it uh it's the profitability of the sector usually the sector Peaks when the readjusted net margins the net profitable of the operations uh is north of 20% and now we are turning around 15% 14% so the and the only way to increase the profitability the only way is for gold to go higher we're not there yet so uh we need a higher gold price to reach a higher profitability that will be the peak of the cycle we haven't seen this frenzy in in uh uh m&a


activities every every every uh uh growth uh strategy implemented is very reasonable all that shows that the sector is really preparing for uh uh uh uh a better better uh better years ahead of us but let's not say years let's stick to 20 20 25 and see where we get when we get to the 3,000 and how those players behave because it's all about their behavior their behavior will tell us if we have reached the peak of the cycle or not I can tell you already that until we reach 3,000 I don't see any


reason to get out of the sector okay I think I've got one more question before I let you go and okay so keeping in mind that we're not in this time yet when we have those homogeneous gains all the way across the sector we've got to do our work still right now in terms of coal any advice you would share for investors who are approaching the sector in 2025 I will uh tell them to diversify uh I I will not give them you know uh very uh uh um original advice if you are not a specialist you diversify


because even specialist can uh Miss uh uh some uh uh uh uh disappointment uh so let's be humble uh first of all uh and the only way in a sector that has a 35% uh volatility 35% it's huge so uh for a nonprofessional I would advise uh diversification that's the only way to reduce the volatility and to increase the the the the uh the expected return on your investment okay I think that's that's some really solid advice to end on heading into the new year so thank you so much for coming on


to talk about gold markets a little bit of silver this was really good always happy to have you here as usual Charlotte it's a pleasure once again I'm Charlotte McLoud with investing news.com and this is lanor with M BL Finance thank you for watching if you like this video make sure you hit the like button and subscribe to our Channel we'd also love to hear your thoughts so leave us a comment below [Music]