• On the cusp of a golden bull run? It’s likely already begun, believes Goehring and Rozencwajg
  • In an upcoming commodity bull market, gold could pull a 7X from its current position 
  • Morgan Stanley is a buyer of gold on the event of declining rates
  • This week’s top ASX precious metals stocks


Our Gold Digger column wraps the news driving ASX stocks with exposure to precious metals.

First things first.

If you’d stuck your money into the goldies this week, then you’d likely be smiling as the XGD ASX All Ords Gold index is pointing 3.2% higher for the week, ahead of the Banks on 1.32% and Resources on 1.08%.

Good session, that. Nicely played. Same again next week, please. And now onto this article’s headline act…

Two sets of investment experts have made some head-turning comments about atomic number 79 this week. Let’s examine, and prize out the best nuggets, because there are some beauts.

Firstly we have Wall Street resources investors Goehring and Rozencwajg, who have just provided their thoughts on what they see as an “upcoming gold bull market” in a new report.

Their best quote is this little show-stopper:

Source: Goehring and Rozencwajg report dated 31/08/2023


Interestingly they clarify they are “no gold bugs”, which makes their thesis even more compelling, really. And that’s a thesis based on determining when gold is undervalued or overvalued.

“If an investor can identify periods when gold becomes extremely undervalued, it can offer exceptional excess returns, often uncorrelated with other financial assets,” they write.

Right now, according to Goehring and Rozencwajg, it’s very much undervalued considering what they believe is ahead.

Pointing to this chart (below) the Wall Street investors believe the size of the Fed’s balance is related to the dollar value of the Treasury’s gold holdings over the long term.


According to the chart, there have been two distinct periods over the past 100 years in which gold was highly overvalued and three periods during which gold was significantly undervalued.

That chart tells us… we’re looking at a peak bargain right about now.

“Gold, relative to the size of the Fed’s balance sheet, is more undervalued today than in the late 1960s or 1990s,” write Goehring and Rozencwajg.

“The reason: even though gold advanced over seven-fold over the last 23 years, the Federal Reserve’s balance sheet has grown even faster. Following the global financial crisis of 2008, global central banks have undertaken radical monetary policies.”

This is just one part of their thesis, but the upshot is they conclude that a commodity bull market has likely started, and that commodities, led by gold, are as undervalued as they have ever been compared with other financial assets.


Meanwhile, here’s what Morgan Stanley reckons

Gold has been showing a huge amount of resilience and staying power amid the interest rates hiking-a-thon this year, believes Lisa Shalett, Chief Investment Officer at Morgan Stanley Wealth Management, and it represents a buying opportunity of, you guessed it, the golden variety.

“Like equities, which have continued to shrug off the negative implications of rising real rates, gold, which moves inversely to real rates and in turn to the U.S. dollar DXY, has remained extremely resilient,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, in a note earlier this week.

“Regarding the intermediate outlook, we are buyers of gold on weakness or declines in rates,” she wrote.

Further to that, gold’s resilience is possibly tied to a market expectation that central banker rate hiking is temporary and “purely technical,” added Shalett.


How high could gold go in an upcoming bull market?

This is the US$14,000 question. And, actually, we  just answered it right there. Or, more specifically, Goehring and Rozencwajg did.

That’s US$14,000 per ounce, a bit more than a 7X from the yellow metal’s current price of US$1,940 an ounce.

Why that figure? The analytical resource investors looked to the past, to dig that one up. In previous gold bull markets, they wrote, “the value of the [US] Treasury’s gold holdings has surpassed the monetary base by over 1.5 times – including in 1980 after the US dollar was no longer backed by gold.

“The Fed’s monetary base today stands at $5.6tr. For the Treasury’s gold holdings to cover the monetary base by 1.5 times, gold would have to reach $32,000 per ounce.

“Critics might argue the monetary base is distorted by excess reserves left on balance at the Fed. At present, excess reserves foot to $3.2 tr, and the Fed has talked of someday draining them out of the system. If that were to happen, the Fed’s monetary base would fall to $2.4 trillion.

“Even under this conservative scenario, gold would have to reach $14,000 for the Treasury’s gold position to cover the monetary base by 1.5 times…

“Could the dollar value of the Treasury’s gold holdings reach 1.5 times the monetary base – as it has twice in the last 100 years? We believe it’s highly probable.” 


What’s hot

The week’s biggest golden gainers 

Zenith Minerals (ASX:ZNC): +67%

Koonenberry Gold (ASX:KNB): +35%

Golden State Mining (ASX:GSM): +30%


What’s not

The week’s biggest falls

Avira Resources (ASX:AVW): -50%

Aldoro Resources (ASX:ARN): -39%

Chalice (ASX:CHN): -36%


Winners & Losers

Here’s a broad look at how ASX-listed precious metals stocks are performing:

Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop.

Stocks missing from this list? Email [email protected]