Uncertainty, Recession Potential, Metals Outlook: PDAC 2022, Day 1

Resource Investing News
outside view of the Metro Toronto Convention Center
Zoran Karapancev / Shutterstock

Sentiment at this year’s event is mixed, with most investors concerned about rising inflation, the potential for a recession and economic policy.

Uncertainty, Recession Potential, Metals Outlook: PDAC 2022, Day 1youtu.be

The annual Prospectors and Developers Association of Canada (PDAC) convention is now underway after being rescheduled from its original March date due to pandemic-related restrictions.

The event, which is celebrating its 90th anniversary, runs at the Metro Toronto Convention Center from June 13 to 15 and is back to its usual in-person format after the 2021 conference was held entirely online; a digital component will follow later this month from June 28 to 29.

Despite noble efforts from PDAC organizers, registration delays led to massive lineups and bottlenecks on the morning of day one; they were resolved by the noon hour.

Sentiment at this year’s event is mixed, with concerns running high about rising inflation, the potential for a recession and economic policy. While prices for many commodities are elevated due to supply chain difficulties, war and rising demand, stock market bearishness has eroded investor confidence and increased risk aversion.

This was highlighted in the first of the day's technical presentations, an outlook and review of the mineral exploration sector from Mark Ferguson, research director and head of mining studies at S&P Global.

During his address, Ferguson noted that 2021 saw significant increases in exploration budgets, which topped US$11.2 billion in 2021, with an additional 200 companies entering the sector.

2022 has not brought the same amount of exploration financing growth due to market volatility.

However, Ferguson did say that the market cap for the overall mining sector is on the rise, currently standing at US$2.5 billion. He anticipates that mining companies' budgets will increase 5 to 15 percent this year, with gold and copper exploration being the main drivers.

The theme of uncertainty continued throughout the day, and was mentioned by Nicky Shiels of MKS PAMP during her presentation. She noted that gold has outperformed tech and crypto by 30 percent, and said she expects to see some rotation out of energy into gold as the yellow metal's appeal as a hedge against inflation grows.

In terms of price, Shiels said that forecasting is especially challenging right now as gold’s future is heavily reliant on what measures the US Federal Reserve uses to quash inflation.

The Fed's path forward will become clearer after this week's meeting, which runs from June 14 to 15.

Click here to read our recap of the second day of PDAC, and don’t forget to follow us @INN_Resource for real-time updates! You can also click here to see our YouTube interviews from the convention.

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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