The U.S. economy will take a downturn this year, but the resource sector will remain ideal for investing in, Chris Temple, editor/publisher of The National Investor, forecasted in a recent Mining Stock Daily podcast.
"A lot of really good stories among small-cap stocks everywhere, not just resources, are literally generational buying opportunities," he said. "You would have said that a year or two ago; now it's even more so."
Temple predicted that inflation will remain sticky and due to ongoing stagnation effects, more of the population, the middle to upper classes, will feel as though the country's economy is in a recession. The full brunt of all interest rate hikes to date will come to bear. Corporate earnings will come in lower than expected, and lots of defaults will happen in the overextended commercial real estate market.
"I don't think we're going to have a major bust necessarily," he added. "There's still a lot of liquidity out there. Even for people that still have some financial ability, that's going start to change behaviors a bit more than we've already seen too. People will start sitting on their hands a little bit."
Current factors contributing to Temple's projections are the large supply of new credit, money and liquidity in the market, record high money market fund balances, persisting inflation and pockets of recession.
"In a lot of areas where demographics and incomes and whatnot can support it, people are doing well," Temple said. "But there's also a lot of people who aren't doing well."
Fed Will Wait to Lower Interest Rates
Temple expects the U.S. Federal Reserve to reduce interest rates but wait until mid-2024 or longer to start, he said. However, as long as the inflation rate remains at about 4%, the Fed has little room to lower them, he noted.
"There is such a gargantuan volume of treasury debt that needs to be issued, that needs to be rolled over, that that's going to crowd out a lot of the private sector at a time that the Fed is still ostensibly trying to withdraw some of this liquidity," Temple explained. "So it's going to keep the level of interest rates higher."
Temple also predicted that the Fed will abandon the target inflation rate of 2% by year-end though not say outright that did.
Once investors realize inflation is not lessening, they will change tack, added Temple. No longer believing the Fed has their back, they will sour to or get out of certain investments like U.S. treasuries. Instead, they will seek out and invest in opportunities with strong fundamentals.
"Money increasingly is going to go where it deserves to go," Temple said.
Upleg in Gold Price Coming
One such place is in gold.
A major jump in the gold price that is sustained, purported Temple, requires that two key circumstances be in play: the Fed has "the accelerator to the floor" and its renewed money printing is not having any effect on the economy or stock market.
"Gold needs to stand out as an alternative that will respond to the next coming wave of fiscal and monetary stimulus that is not going to help these other areas because they're going to be too laden with debt to move forward that much more," he said.
Temple estimated this will occur in a matter of months versus years.
When it happens, he added, "the [investments] that people are comfortable with now they will become increasingly uncomfortable with, and then they will start to reallocate their portfolios and say, 'Gee, maybe the gold bugs are right, and I should get a little bit of this.'"
Then the gold market will see an influx of generalist investors and no longer be dominated by central banks and large investors.
Resources to Attract Investors
Temple also pointed out the opportunity for investors is not just in gold but in all key metals and commodities because most of them are in or soon will be in undersupply.
"You're going to start getting these new generations of investors interested in resources generally when they start to realize going forward that we have chronic shortages of everything that we need," he said.
They will be choosy, added Temple, opting to put their money only in companies already generating cash and turning a profit.
BioLargo Inc.
One interesting company to consider, Temple noted in a Jan. 4, 2024 interview with the CEO, is BioLargo Inc. (BLGO:OTCQB), which he has recommended as a Buy for more than a year.
The California-based cleantech firm invents, develops and commercializes innovative platform technologies that solve challenging environmental problems like industrial odors and contamination problems.
Share Ownership and Structure
BioLargo has about 289.5 million (289.5M) outstanding shares and about 248M floating shares, according to Yahoo Finance.
As for share ownership, insiders and management hold about 14.4%. They include, reported Reuters, Chief Science Officer Kenneth Code with 8.67%, CEO Calvert with 3.41% and Director Jack Strommen with 1.5%.
One institution, First American Trust, owns about 0.04%.
Retail investors own the remaining roughly 85%.
BioLargo's market cap is US$50.95 million. Its 52-week price range is US$0.15 to US$0.24.
