6 February 2026 | 9:00PM HKT Equity Research METALS & MINING Asia Commodity Corporate Day: Supply constraints and value of resources in a new context We hosted our GS Asia commodity corporate day over Feb 2-4, comprising 13 corporates with commodity exposures including copper, aluminum, lithium, tungsten, nickel, cobalt, rare earths, gold, silver, graphite, potash, coal, selected other minor metals, and battery materials. Feedback in general suggests a positive view of miners and producers on most commoditi ...

Market Overview - In January 2026, the equity market experienced a strong start driven by ample liquidity and policy expectations, with major indices showing a pattern of initial gains followed by a pullback, indicating a significant increase in market risk appetite [1][10] - The Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index rose by 3.76%, 5.03%, and 4.47% respectively, with the average daily trading volume in A-shares reaching a historical high of 3.04 trillion yuan, a substantial increase from December [1][10] - The Shanghai Composite Index hit a new high of 4190.87 points, but the momentum was curtailed mid-month due to regulatory adjustments and large-scale redemptions of broad-based ETFs, shifting the market from a "fast bull" to a "structural slow bull" [1][10] Sector Performance - Growth style outperformed value style, with the Sci-Tech 50 index, representing AI computing power and semiconductor equipment, surging by 12.3%, while the CSI Dividend Index only increased by 3.5% [1][10] - The non-ferrous metals sector led the gains with a 22.6% increase, driven by soaring precious metal prices and rising resource prices. The media sector benefited from the improved sentiment in AI marketing and gaming, rising by 17.9%, while the oil and petrochemical sector increased by 16.3% due to geopolitical risks pushing oil prices up [1][10] - The banking sector was the only one to experience a significant decline, dropping by 6.6% due to the impact of large ETF redemptions [1][10] Investment Outlook - In the AI sector, the increasing stock of chips has accelerated the iteration speed of AI models, with a clear trend of model differentiation. The emergence of Clawdbot highlights the strong capabilities of large models and the demand for suitable product forms [3][12] - The non-ferrous metals sector is expected to experience volatility, influenced by geopolitical events and the potential for a shift in monetary policy under the new Federal Reserve chair nomination. Despite short-term corrections, the long-term upward trend for precious and non-ferrous metals is anticipated to continue due to ongoing central bank gold purchases and supply constraints [4][13] Investment Strategy - The company maintains an optimistic outlook for the 2026 equity market while remaining vigilant about potential risk events. A proactive and diversified investment approach is recommended to retain flexibility for timely responses [5][14] - Key focus areas include AI-driven technological innovation, which is expected to continue evolving rapidly, and the infrastructure supporting AI applications, such as GPUs and power supply [5][14] - The insurance sector is highlighted for its growth potential due to rapid increases in liabilities and sustainable investment returns [6][14] - There is a positive long-term outlook for gold, copper, aluminum, and rare metals, with caution advised regarding short-term price reactions in futures and stock prices [6][14] - Continued attention is recommended for the lithium battery supply chain, internet, gaming, and offshore wind industries [7][15]

Market Performance - The MSCI Emerging Markets Equity Index has risen for a second consecutive day and achieved a fifth straight week of gains, marking its longest winning streak since May, with an increase of approximately 7% this year, outperforming the S&P 500's roughly 1% advance [1][12] - The MSCI EM Latin America Index closed at its highest level since 2018 and rose another 1.3% on Friday, resulting in a 7.6% weekly gain [4][5] Investor Sentiment - There is a record pace of cash inflow into emerging-market funds as investors rotate out of US holdings, contributing to a record high for the EM stocks gauge [4][12] - The National Bank of Poland, the world's largest reported gold buyer, has approved plans to purchase an additional 150 tons of gold, indicating strong demand for precious metals [8][13] Currency Movements - Currencies such as the Brazilian real, Colombian peso, and Chilean peso have appreciated by more than 3% this year, reflecting a trend of diversification away from US assets [8][13] - China's central bank has set the yuan's daily reference rate stronger than the 7-per-dollar level for the first time in over two years, signaling a tolerance for the currency's rally [2][12] Regional Developments - The benchmark for Emerging Europe, Middle East, and Africa has risen on all five days of the week, on track for its best month since 2020, indicating a broadening of the rally beyond Asian technology shares [4][12] - Political shifts in Latin America and robust global growth, including an AI spending boom, are contributing to the positive momentum in emerging markets [7][12] Market Outlook - The combined value of emerging markets is nearly $36 trillion, approximately half of the US market valued at $73 trillion, suggesting potential for growth despite geopolitical tensions [11][13] - Themes of de-dollarization and fiscal profligacy are re-emerging, which could positively impact EM risk premia [11][12]

Core Viewpoint - Golden Cariboo Resources Ltd. is participating in the Vancouver Resource Investment Conference (VRIC) on January 25-26, 2026, to engage with shareholders and potential investors about its exploration activities in the Cariboo Gold District [1][3]. Company Overview - Golden Cariboo Resources Ltd. is focused on rediscovering the Cariboo Gold Rush through targeted drilling and trenching programs on its Quesnelle Gold Quartz Mine property, which spans 94,899 hectares (234,501 acres) [6]. - The Quesnelle Gold Quartz Mine property is located 4 kilometers (2.5 miles) northeast of Hixon, British Columbia, and includes a historical gold-silver deposit discovered in 1865 [7]. Conference Details - The Vancouver Resource Investment Conference (VRIC) is a significant event for investors and industry professionals in the commodities sector, featuring over 120 keynote speakers [4][5]. - The conference will take place at the Vancouver Convention Centre West Building, with Golden Cariboo exhibiting at Booth 1019 [8].

Gold (GCG26) prices at mid-week were solidly higher but down from an overnight high that set another record of $4,891.10, basis February Comex futures. Gold backed down a bit after President Donald Trump said at a speech to the World Economic Forum in Davos, Switzerland, that he won’t use force to acquire Greenland. That took some of the risk aversion out of the marketplace after Trump had said a couple weeks ago that he would not rule out using military force to take Greenland. More News from Barchart ...

Core Viewpoint - The international gold market has experienced an unexpected strong rally since the beginning of 2026, with gold prices reaching historical highs due to various stimulating factors, including geopolitical tensions and monetary policy shifts [2][6]. Group 1: Gold Price Movements - International gold prices surged from $4,340 per ounce at the beginning of January to a peak of $4,891.1 per ounce by January 21, marking a cumulative increase of 12.7% in less than 20 days [2]. - Domestic gold futures also saw significant gains, with the main contract price rising by 4.61% to surpass 1,100 yuan per gram [3]. Group 2: Stock Market Reactions - Gold stocks experienced a surge, with over ten gold-related stocks hitting the daily limit up, including Zhaojin Mining and Chifeng Jilong Gold Mining [4]. - The gold ETF (159562) rose by 5.73% on the day, accumulating a 25.82% increase over the first 13 trading days of the year, reaching a new historical net value high [4]. Group 3: Geopolitical Factors - The recent escalation of geopolitical conflicts has driven significant inflows into gold as a safe-haven asset, with the U.S. imposing tariffs on several countries, further straining transatlantic trade relations [7][8]. - Denmark's decision to sell approximately $1 billion in U.S. Treasury bonds amid the Greenland dispute marked a significant move, reflecting growing concerns over U.S. debt and geopolitical tensions [9]. Group 4: Central Bank Actions - Global central banks have been on a gold-buying spree, with net purchases reaching 1,136 tons in 2024, the second-highest on record, and major buyers including China, Poland, and Turkey [11]. - China's central bank has increased its gold reserves significantly, with a total of 2,306.32 tons by the end of 2025, marking a historical high in the proportion of gold in its foreign exchange reserves [11]. Group 5: Market Sentiment and Predictions - Analysts have raised their gold price targets, with Goldman Sachs predicting a price of $4,900 per ounce by the end of 2026, driven by central bank purchases and anticipated interest rate cuts [21]. - Other institutions, such as UBS and Citigroup, have set even higher targets, with Citigroup suggesting a potential short-term price of $5,000 per ounce [21][22]. Group 6: Investment Trends - The demand for gold bars and coins increased by 18% in 2025, reaching 1,250 tons, with significant contributions from China [16]. - The global gold ETF market saw a record net inflow of $89 billion in 2025, with total holdings reaching 4,025 tons, marking a historical peak [16]. Group 7: Strategic Value of Gold - The strategic value of gold is being redefined, transitioning from an optional asset to a necessary component in high-uncertainty markets, as recognized by various market participants [22]. - The gold ETF (159562) has become a popular investment tool, with significant inflows and a focus on gold mining companies, reflecting the growing interest in gold as a strategic asset [23].

Core Insights - Concerns about de-dollarization are rising as investments in gold and silver increase, leading to both metals briefly ranking at the top of global asset market capitalizations at the beginning of the year [1][4]. Group 1: Market Dynamics - The renewed interest in hard assets like gold and silver is driven by geopolitical tensions, trade disputes, and expectations of a more accommodative U.S. monetary policy, which have negatively impacted confidence in the dollar [2]. - Gold's market capitalization is approximately $31.1 trillion, making it the largest asset globally, while silver briefly surpassed Nvidia in market capitalization before falling back [3][5]. Group 2: De-Dollarization Context - De-dollarization refers to the gradual move away from reliance on the U.S. dollar in global trade and reserves, with countries and institutions seeking to reduce dependence on U.S.-controlled financial systems rather than completely abandoning the dollar [6]. - The trend has accelerated due to increased sanctions and geopolitical tensions, prompting central banks, especially in emerging markets, to boost their gold reserves as a neutral asset [7]. Group 3: Investor Sentiment - The rise in gold and silver prices is seen by some investors as an indication of growing concerns regarding the long-term stability of the dollar [8]. - Silver's recent surge has sparked discussions about whether cryptocurrencies might behave similarly to traditional safe havens during geopolitical crises [9].

Core Insights - The global financial system is under significant strain due to unprecedented and unsustainable debt levels, leading to a situation where paper currencies are losing value [2][4][12] - The U.S. dollar, once a dominant global currency, is facing declining trust and demand, particularly as debt levels rise to $38 trillion and the debt-to-GDP ratio reaches 124% [12][14][15] - The trend of de-dollarization is gaining momentum, with countries like China moving away from U.S. Treasuries in favor of gold, indicating a shift in global financial dynamics [29][41] Economic Environment - The U.S. markets experienced a downturn in 2025, with significant stock buybacks amounting to $1.3 trillion, indicating manipulation of share prices by corporate insiders [25][26] - The private credit market is showing signs of distress, with a high level of risk associated with off-balance sheet debt and subprime borrowers [21][22] - The Federal Reserve's attempts to maintain bond market stability through rate cuts may not be effective, as rising bond yields pose a challenge to the U.S. government's ability to manage its debt [28][32] Precious Metals Outlook - Gold and silver are expected to continue their upward trajectory as they serve as a hedge against the declining value of paper currencies [36][42][48] - The demand for gold is increasing among central banks and commercial banks as a strategic reserve asset in anticipation of future financial instability [47] - The long-term trend indicates that paper currencies will continue to be debased, reinforcing the value of precious metals as a store of wealth [44][45][49]

Core Viewpoint - Gold equities are projected to remain highly attractive within the mining sector in 2026, supported by strong valuations, balance sheets, and free cash flow generation, despite expectations for price consolidation [1][2]. Industry Outlook - Analysts maintain a bullish stance on gold equities for 2026 due to appealing valuations, while being neutral on gold prices [2]. - Structural drivers supporting gold's strength in 2025, such as de-dollarization, US fiscal concerns, macroeconomic uncertainty, central bank buying, and physical demand through ETFs, are expected to persist into 2026 [2]. Price Expectations - Jefferies anticipates gold prices will remain rangebound in 2026, with a potential period of consolidation, which is viewed positively for the sector [3][4]. - Real interest rates are identified as a significant factor influencing gold prices, particularly with potential changes in US monetary policy [3]. Sector Health - The gold mining sector is characterized by strong balance sheets, disciplined cost control, and increasing shareholder returns, with nine out of twelve covered gold miners in net cash positions [5]. - Cost inflation has remained below 5%, and real all-in costs are under US$2,400 per ounce, contributing to a healthy sector outlook [5]. Future Expectations - Jefferies expects favorable conditions to continue into 2026, with some upward pressure on labor and consumables anticipated, though still below 10% [6]. - Higher gold prices are expected to influence reserve calculations, potentially extending mine lives without significantly impacting near-term margins [7]. M&A Activity - Sustained high gold prices and growing cash balances may shift investor focus towards growth, setting the stage for increased merger and acquisition activity as financial discipline gives way to strategic expansion [8]. Top Gold Picks - Barrick Gold Corp. is identified as the top pick among large-cap miners, expected to deliver the highest free cash flow yield in 2026 at approximately 12% [9][10]. - Alamos Gold Inc. is viewed as a catch-up opportunity among mid-caps, with potential for re-rating driven by improved performance and expansion studies [10]. - Royal Gold, Inc. is highlighted for its unjustified valuation discount, with expectations for improved market sentiment due to medium-term growth clarity [11]. Other Metals - Jefferies has become more cautious on copper equities due to valuations, despite maintaining a positive outlook on copper prices [12].

Core Viewpoint - The global financial system is under significant strain due to unprecedented debt levels, leading to a shift from paper currencies to real assets like gold as a store of value [4][7][44]. Group 1: Economic Context - The U.S. national debt reached $38 trillion in 2025, with a debt-to-GDP ratio of 124%, indicating a severe financial imbalance compared to historical levels [15][19]. - The U.S. dollar's status as the world's reserve currency is increasingly questioned, with countries like China and Japan reducing their holdings of U.S. Treasuries [32][33]. - The global shadow-banking system, valued at $250 trillion, poses significant credit risks, particularly as it operates outside regulated frameworks [26]. Group 2: Market Dynamics - In 2025, U.S. markets experienced a significant downturn, with the DXY and dollar value declining, while other markets, including those in the UK and Japan, outperformed U.S. indices [21][22]. - Stock buybacks in 2025 amounted to $1.3 trillion, indicating market manipulation by insiders to inflate share prices [28]. - The reliance on AI-driven market gains, which accounted for 80% of U.S. market growth, raises concerns about sustainability and underlying economic health [23][24]. Group 3: Precious Metals Outlook - The trend towards gold and silver as superior assets is reinforced by the ongoing de-dollarization and central banks' increasing gold acquisitions [43][44]. - Despite potential short-term fluctuations, the long-term trajectory for gold and silver prices is expected to rise as paper currencies continue to lose purchasing power [48][49]. - The anticipated structural quantitative easing in 2026 is likely to further weaken the dollar, providing a favorable environment for precious metals [36][38].