Michael Berry of Disruptive Discoveries Journal is out with a good slide deck on macro and metals themes that he presented earlier this month for the Quebec Mineral Exploration Association.
Mining investors know the story well – excess supply and insufficient demand have hit commodity prices hard, as well as the energy-reliant Canadian economy. Meanwhile, debt levels globally remain high: “The world is still highly levered, so is Canada.” Not to mention the world’s major mining companies, which are shedding assets to reduce their debt loads.
Berry concludes that it’s a “risk-off world until escape velocity, inventory is worked off and deleveraging progresses sufficiently.” The black box that is China’s true economic situation adds a measure of volatility.
Berry expects greenfield exploration to continue to slow, which he points out becomes a “self-correcting mechanism” at some point. The million-dollar question, of course, is when.
On gold, Berry sees $1,300 to $1,400 by 2020 “given the precarious nature of the world’s overhanging debt load of $70 to $80 trillion and the bloated balance sheets of the worlds central bankers.”
Berry sees a 2020 window for commodity recovery, and here’s his list of metals ranked by probability of recovery, led by two “alternative energy” metals:
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