What you need to know: • The precious metals and mining market significantly outperformed broader indices in the month of March with the GDX rising 15% versus the TSX being down slightly • Gold rallied heavily following the collapse of several major banks and the U.S. Fed guiding for a pause on rates in the near term • This month only strengthens our confidence that 2023 will be a standout year for both precious metals and base metals and encourage investors to position themselves accordingly Sentiment Update Following a down month in February, the precious metals rebounded sharply in the month of March and pressed on to break through recent highs. Gold rose 7.2% in the month to $1,969.7/oz, silver rose 14.5% to $24.0/oz, and copper sat flat, down just 1.8% to $4.10/lb. Mining equities significantly outperformed broader markets with the GDX and the GDXJ rising 15.0% and 13.4%, respectively compared to the TSX which was down slightly. On the other hand, battery metals struggled with lithium and nickel down 35% and 7% respectively. Gold rallied heavily following the collapses of Silicon Valley Bank, First Republic Bank, and Credit Suisse as investors fled to the safe haven asset. This caused a 10% rally in gold starting on March 8th, going from $1,818/oz to over $2,000/oz by March 20th. Gold then rejected the phycological $2,000 level, as seen multiple times over the last few years. In the following days, the U.S. fed chose to increase rates by 25-bps as the market expected. There was originally a 25% chance of a 50-bps hike, but the risk of contagion due to banking collapses shifted that to either a 25-bps hike or no hike at all. Powell guided that the Fed is close to pausing rate hikes and that the collapse of Silicon Valley Bank was due to poor management and that there poses no contagion risk. The Fed’s policy statement called the U.S. banking system “sound and resilient”. However, Powell did confirm that the Fed still intends to fight inflation and will monitor how the banking failures slows demand and lending. Powell also stated that he does not expect any rate cuts in 2023, contrasting with the market’s perception. Gold rallied 1.6% after the announcement, compared to the -1.7% move on the S&P500. On March 14th, the inflation data came out as 6.0% YoY and 0.4% MoM, in line with consensus expectations and well below the 6.4% posted last month. Core inflation came in at 5.6% YoY, also in line with consensus. We reiterate that with inflation declining at a measly pace, we think that in 2023, gold will increasingly be viewed as a safe-haven especially considering deteriorating economic data (and now bank failures), potential for lower interest rates in the back half of the year, and various central banks accumulating gold.