A rush into equities has seen the resources sector, as measured by the metals and mining index, rise by 9% over the first nine trading days of 2023, while the ASX gold index is up 10.5%. Even the all-ordinaries index is up 5%.

It’s a pointless calculation but it’s also sobering to convert those moves made in less than two weeks into what they might mean over 12-months of trading with the resources index rising at an annualised 230%, the gold index increasing by 270% and the all-ordinaries rising on 130%.

Too good to be true? Absolutely, but also a measure of investor confidence that ’23 will be a better year than ’22 with China reopening and central banks tipped to finish their punishing round of interest rate increases later this year.

If that happens then the confidence seen in share prices, such as BHP’s 4.7% ($2.50) rise to $49.32, could be well-placed with the world’s biggest mining company riding a wave of optimism in both the iron ore and copper markets, driven by China’s return from its Covid lockdown slump.

But there’s also no doubt that the January rush could turn out to be a case of too far, too fast with a pause inevitable as investors consider the reality of inflation continuing to run at close to a 40-year high and central bank interest rates continuing to rise.

The latest rate forecast from London-based HSBC Bank is for the U.S. central bank to make one more upward move, an increase of 0.5% on February 1 which will take its prime rate close to 5% — where it will sit for the next 12-months before a round of rate cuts start in early ’24.

Gold, which will be a big winner when rates peak and roll over, has started to move higher in anticipation of next year’s forecast cuts, adding US$45 an ounce this week to trade around US$1883oz (the highest since last May) – taking the metal’s rise since the start of ’23 to US$82/oz.

Apart from the prospect of lower interest rates next year, the appeal of gold is from sustained central bank buying which is running at the highest rate since 1967, led by China, which is keen to shift its sovereign wealth out of the U.S. dollar, a move which has seen it demand the right to pay for oil and other commodities in the Chinese currency, the yuan.

On the corporate side of gold, a flurry of deals sparked investor interest with Catalyst buying Vango in a $66 million all-shares transaction and while that might be a small beer trade, it’s the name of the man behind it which will interest older investors.

James Champion de Crespigny, Catalyst chief executive, is a son of Robert Champion de Crespigny, who made the family fortune in an earlier gold boom when he was chief executive of Normandy Mining.

The fruit, so they say, never falls far from the tree and if the de Crespigny family reckons it’s time to get back into gold, lesser mortals might do well to take note.

The Catalyst + Vango merger follows last year’s flurry of gold deals led by Genesis merging with St Barbara and Pantoro planning a tie up with Tulla Resources.

Other gold news included:

  • Peregrine Gold rising by 8.5c (27%) to 47c after reporting exceptional assays up to 1797 grams of gold a tonne over a narrow (29 centimetre) intersection at its Newman gold project in WA.
  • Ausgold adding 0.8c (16%) to 5.6c after announcing the start of a definitive feasibility study into its Katanning gold project in the south of WA.
  • Tempus Resources rising 1.5c (27%) to 7c after reporting high grade gold hits at its Elizabeth project in Canada, and
  • Calidus tipped by CG Capital Markets to see its share price more than double from 36c to 75c after achieving commercial production at in Warrawoona project in WA.

Battery metals, one of last year’s star sectors, started ’23 strongly with a burst of deals to rival what’s happening in gold with Chile’s lithium champion SQM paying $20 million for a cornerstone 20% stake in Azure Minerals, followed by IGO and China’s Tianqi lobbing a 50c per share takeover bid for Essential Metals.

Azure added 6.5c (29%) to 30c after the SQM deal was unveiled, while Essential rose by 16c (48%) to 49c after the IGO/Tianqi bid was reported.

Other news from the battery metals sector included:

  • Patriot Battery Metals added 15c to 83c thanks to growing confidence in its Corvette lithium project in Canada. Macquarie has a buy tip and price target of $1.20.
  • Talga rose by 16c to $1.60 after announcing a deal to supply graphite to French battery maker Verkor with material from its Vittangi mine in Sweden.
  • Loyal Lithium put on 6.7c to 37c after confirming historical data pointing to lithium bearing pegmatites on the company’s Canadian tenements.
  • Element 25 gaining 19c to $1.14 after announcing a deal covering future manganese supply to the European car maker Stellantis.
  • Burley Minerals added 5c to 22c after reporting progress with field work at its Chubb lithium [project in Canada, and
  • Pilbara Minerals bounced back from a period of heavy selling to add 36c this week to $4.13, bolstered by a buy tip from Citi with the investment bank tipping a price target of $4.70.

Copper, the bellwether metal, played its role in the return of optimism to commodity markets thanks to reports of a major shortfall in supply which lifted the price above US$9000 a tonne for the first time since June with Fitch Solutions forecasting a run to US$11,500/t (US$5.33 a pound) by next year.

Stocks which benefitted from the higher copper price included Sandfire, up 47c to $6.74. Aurelia, up 1c to 14c and Peel Mining, up 4.5 to 21c after releasing an upgraded resource estimate for its South Cobar project in NSW with CG Capital Markets tipping another price surge by Peel to 50c.

Norwest Minerals also caught the eye of traders after reporting maiden drilling results of up to 52 metres assaying 1.4% copper from surface at its Bali project in the north of WA with a 12m section grading 4.4% copper from 4m.

Iron ore continued its strong upward run thanks to growing confidence in demand from China as it emerges from Covid lockdowns and restocking after a seasonal steel making slow down.

Fortescue Metals Group was the big winner from the iron ore revival, adding $1.53 this week to $22.75, a price which is 54% higher than the low of $14.70 reached by FMG just three months ago.

Investors shrugged off the sudden retirement of FMG’s chief financial officer but Macquarie Bank remains wary, sticking with a sell recommendation on the stock and a price target of $17.50.

Other news and market moves of interest include:

  • Oil reported to be heading back to US$100 a barrel as China resumes rapid growth, dragging local oil stocks higher with Woodside rising by $2.20 to $36.20 while Santos added 21c to $7.18. Morgan Stanley reckons Santos is heading up to $9.31.
  • Coal stocks fell despite reports of China returning as a buyer of Australian material. Whitehaven slipped 42c lower to $8.65 and New Hope was down 65c at $5.91.
  • Galena Mining added 3.5c to 28c after reporting the delivery of first ore to the processing plant at its Abra base metals project in WA.
  • Lunnon Metals led a stronger nickel sector with a rise of 7c to 93c after reporting an upgrade in the resource at its Foster mine in WA, and
  • VHM, a rare earth float backed by iron ore and lithium billionaire Chris Ellison had a poor start after listing on Monday with its shares falling to $1.08, well below their issue price of $1.35.