Elements | February 2023

The second month of the year has been affected by job reports and statements from central banks that significantly impacted the stock market. How long and how much will they raise rates and, above all, when will they start lowering again? More on this further down.

During the month, we had our first digital investor meetup with the theme "Outlook for gold, silver, and miners in 2023". Many of you were there live and asked great questions. You will find a link to the recording below for those of you who were not there. During 2023, we plan to have four digital investor meetups, so keep an eye out here and on LinkedIn/Twitter, where we will publish more information on an ongoing basis.

AuAg Essential Metals has been "live" for two months, and we already have several thousand investors in the fund. It has been well received and is available for retail investors and financial advisors on many platforms. During the month, the fund became available for purchase at Movestic, which we are very happy and grateful for.

Some more good news is that the passporting of AuAg Essential Metals to Norway, Finland, Denmark and Germany has been approved by the Financial Supervisory Authority. Now we are waiting for platforms to add the fund, which usually takes a few weeks. We will write on LinkedIn and Twitter as soon as the fund is available on a new platform.

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:

• Video: Gold, Silver & Mining Outlook 2023 - AuAg Digital Investor Meetup
• Video: Proactive Investors - AuAg Funds sees February gold price dip as a "buying opportunity"
• Article: Movestic - Gästkrönika: Essentiella metaller för vår framtid (Swedish)
• Portfolio Update: AuAg Silver Bullet February 2023

AuAg Thoughts

• Once again, we had a month where the Central Banks' statements affected the market. When newly published statistics showed some strength in the American economy, the FED (US central bank) were quick to communicate that they will not lower interest rates for a long time ("higher for longer"). This caused many markets to go sour, and the market optimism about imminent interest rate cuts was blown away.
• However, we find it difficult to see the underlying economy doing as well as reported, as we observe many job cuts, increased corporate bankruptcies and consumers that are getting squeezed. Consumption is affected by reduced purchasing power from higher prices and by housing costs that take up a larger and larger share of disposable income.
• As usual, the Central Banks will pivot too late, "higher for too long". When there are too many/large negative effects of the high interest rate, they get a real reason (excuse) to start lowering it again. Then they will probably also return to using quantitative easing to prop up (rescue) the financial system. A system that, for many decades, already suffers from unhealthy stimulus and monetary inflation.
• The stock market can gain real momentum upward again as soon as the market begins to believe that a policy reversal from the central banks is approaching. However, one should know that historically stock markets have been able to go down for quite a long time (and even a lot) during the beginning of an interest rate cut period. We'll see if history repeats itself - or if it's different this time.
• The price of raw materials and metals is controlled in the long term by the relationship between demand and supply. In the short term, however, prices can move up and down in a somewhat irrational way. These short-term movements can be used to one's advantage.
• The short trends are influenced by speculation via various derivatives, primarily on COMEX, the American commodity exchange. The largest commercial banks have models that are used to influence the market in various events, such as press releases, job statistics and central bank statements. They can also control the market through contract dumping in large volumes and, at the same time, "front-run" traders who act on technical analysis.
• The most important thing to note is that the same commercial banks are always buyers during downturns. This basically means that every "artificial" drop in prices is an extra good opportunity to buy cheap. As always, buying low and selling high is the key to successful investing.
• We are now approaching a situation where the physical market for metals will take over and thus control the price development. This occurs when the demand for metals begins to exceed the possible supply. This will lead to solid and long-lasting increases in metal prices. For a long-term investor who believes in the case, these short-term movements in the market are more noise than anything else.