Resources Rising Stars: Gold can keep flying high, Bell Potter says

Bell Potter’s David Coates says gold could hit US$3000/oz in the next six to nine months
Prices have retraced to US$2480/oz since hitting an all time high on August 20, but they’ve stayed high despite traditional headwinds like high real interest rates and a strong US dollar
Seven stocks that excited Bell Potter at Resources Rising Stars

Gold’s hot run has more room to rally after surging to record highs in the face of traditional headwinds in high interest rates and a strong US dollar.

That’s the view of Bell Potter senior resources analyst David Coates, who says it’s not unreasonable to think gold could lift higher to US$3000/oz in the next six to nine months.

“Gold’s obviously flavour of the month or flavour of the year, it’s been one of the few outperformers, which has been great,” he told Stockhead at the Resources Rising Stars conference on the Gold Coast yesterday.

“The gold price is obviously having a bit of a run, but I think it could have a lot further to go to be honest.”

Gold hit ~US$2530/oz on August 20 before retracing to ~US$2480/oz on Tuesday according to the London Bullion Market Association.

“We’re making record high gold prices when we’ve got high real interest rates and a high US dollar, (but) they’re typically pretty strong negative correlations,” Coates said.

“To be making a record high gold price within that sort of environment, I think, just leaves a lot of upside to the gold price and we are starting to see both those metrics roll over.

“It’s getting some momentum behind it, but I think it’s got quite a long way to go.”

Higher prices have recently been eaten up by cost inflation, but Coates thinks that’s rolling off for gold miners.

While it wasn’t an official forecast, Coates said in a note last year we could see US$3000/oz by the end of 2024.

“It was a bit more of a stretch target, perhaps, but I think we could potentially see that in the next six to nine months.”

What about the rest?

While gold is at a boiling point, the battery metals that won the last mining boom are barely at a simmer.

That could present an opportunity, with many critical minerals markets having the smell of a bottom to them.

“There are strategic factors at play, I suppose, in those prices. China’s flooding the market in some of those and potentially looking to dominate supply over the medium to longer term as a result,” Coates said.

“But I think it’s definitely an opportunity pick up quality names and deep value opportunities.

“And the market’s cyclical. I think the fundamental demand story behind a lot of those is quite real and we will see prices improve.”

While he thinks iron ore is looking tough, lithium, rare earths, uranium and nickel could present opportunities.

“It’s about quality companies of value in some of those unloved spaces, but in some of the more headline spaces, like gold and to a certain degree copper, the equities have got a lot of catching up to do,” Coates said.

Who does Bell Potter like?

When it comes to companies, Coates said a number presenting at the Royal Pines on the Gold Coast over the past two days had some points of interest for investors, starting with 2024’s top gold exploration name Spartan Resources (ASX:SPR).

“The story there continues to get better and stronger. How much upside is still there? We’ll wait and see. It’s probably not the ten bagger it was last year, but it’s still very exciting,” he said.

Base metals stocks are also looking interesting.

“Companies I’ve seen and been excited by this year would include (Bill Beament’s) Develop Global (ASX:DVP). Their Woodlawn mine is about to kick off, the mining service business going great.

“Then FireFly Metals’ (ASX:FFM) copper with Steve Parsons. That copper project is coming along really nicely, and it’s got plenty of resource growth to come.”

Sold-off Chalice Mining (ASX:CHN), which owns the undeveloped Julimar nickel-copper-PGE deposit near Perth, is also of interest to Coates as an option on future lifts in palladium and platinum prices.

“Those guys don’t need any cash until 2028, for another four years at least, and in the meantime they’re trading in line with some very depressed PGE prices,” he said.

“I see those guys as a really free option on any upside there.”

At the smaller end of the market, Coates said WA gold explorer Warriedar Resources (ASX:WA8), US silver resource owner Sun Silver (ASX:SS1) and South Australian copper explorer Coda Minerals (ASX:COD) were among the companies that enhanced their reputation at RRS.

“Sun Silver, they’re really starting to put their mark on on that project (Maverick Springs) in Nevada, there’s resource growth there and they’re getting some really encouraging signs on the met work,” he said.

“And speaking of met work, Coda Coda Minerals there’s a couple swing factors there that might work in their favour and they’re definitely pretty deep value if some of that work comes through for them.”

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead.

Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.

At Stockhead, we tell it like it is. While Spartan Resources and Sun Silver were Stockhead advertisers at the time of writing, they did not sponsor this article.