Monthly Letter

Elements | June 2023

juni 08, 2023

During the month, we have been active in the media to share our thoughts about the investment environment, so don't miss the links in the Research Center below. A major focus on the market has been the US debt ceiling, more on this further down.

Here are some AuAg-highlights from May.

We were honoured to be at Nordnet Live together with Lundin Mining, Boliden, and Copperstone. The theme was "Commodities in a portfolio", focusing on copper.

In May each year, the "In Gold We Trust" report is released, which is the most reputable publication focusing on precious metals. In this year's edition, two pages were dedicated to AuAg Gold Mining, our unique ETF, which we are very proud of.

The funds also became available at Pareto in Sweden during the month after being launched at Pareto in Norway the month before. We also took the opportunity to record a podcast with Pareto.

We are also planning for the next digital investor meetup, which will take place on June 20 at 11:00 a.m. This time's theme will be "Metals for the green transition - an outlook for industrial and technology metals". You can register here, and if you cannot participate live, everyone who registered will receive the link to the recording sent via email.

Use our unique "Research Centre" on an ongoing basis to take part in our current view of the market and the macro environment. We communicate all the time.

Here are a few media links from the past month:

Investment Solutions

Click on one of the funds below to get to the respective fund page. There you can find more information, such as: how to invest, the updated fund sheets (under "Documents"), and the live ticker price on the holdings.

AuAg Thoughts

The month of May was reflected by tough discussions in the US between Democrats and Republicans regarding a necessary raise of the so-called "debt ceiling". At the end of the month, they managed to reach an agreement and thus prevent a suspension of payments that would otherwise have occurred at the beginning of June.
The debt ceiling is USD 31,400,000,000,000 and via the US Debt Clock, you can see the US and the world's debts "live". Now they have reached a settlement, which means some minor savings, but above all, a solution without a fixed ceiling. This allows borrowing everything that will be needed until January 2025. The debt the US has in January 2025 will be the new debt ceiling.
We see continued monetary inflation after this almost unlimited opportunity to borrow even more (new debt) to stimulate the economy. The high interest rate level will ultimately create a recession in the US, and it will require significant monetary stimulus to save the financial system. Monetary inflation is the strongest long-term driver for a rising gold price.
The US was close to a default, and if it were to happen, it would have led to a major crash in the US stock market. Somewhat counterintuitively, there would have been even bigger crashes outside the USA. This has caused currency traders to buy, rather than sell, USD to protect themselves. The US dollar has therefore strengthened several percent against most currencies during May. This has provided temporary headwinds for gold and silver, but it is a movement that is expected to reverse now that the debt ceiling settlement is in place and has been voted through.
China has had a hard time coming back from the extensive COVID lockdowns. The total shutdown has led to many job losses. The entire world's future growth depends on China's ability to restart its production capabilities and consumption. But still, things are slow, which affects the demand for raw materials and other products as China is such a large market. China is known for stimulating the economy and has yet not been afraid of taking on more debt. We expect new stimulus packages from China to arrive soon, giving momentum to many parts of the financial system. In particular, new stimulus signals from China are expected to strengthen the stock and commodity markets.

AuAg Trends

Few people have missed everything written about Artificial Intelligence (AI) lately, with tools like ChatGPT and Bard. These tools give us a flavour of the revolutionary changes that AI can bring to our future. During the month, companies that produce the graphics cards/GPUs needed to handle large amounts of data quickly received large investor capital flows. Perhaps the most talked about company right now is Nvidia, which has become the world's 6th most valuable company (6 years ago, Nvidia was in place 572).
GPUs are critical to the advancement of AI, and several elements and metals are required to create them. Some of these are silicon, tantalum, palladium, copper and cobalt. [Source]