Note: This text is a translation from the original language German.
Last year once again revolved around the theme of COVID-19 and was characterized by high market volatility. In times of uncertainty in the general stock markets, commodities like gold or silver often thrive. However, 2021 taught us that uncertainty and shaky precious metal prices can go hand in hand. While precious metals, especially gold and silver, and the corresponding mining companies had a challenging year with losses, lithium stocks continued to gain strength. The scenario we've been predicting for years of an exponential increase in electric mobility that lithium production cannot keep up with is increasingly becoming a reality. This rally was further fueled by world leaders who, due to the COVID-19 pandemic, created relief funds, often tied to sustainability and frequently electric mobility.
Lithium increasingly presented itself as the major bottleneck for electric mobility in the past year. Let's get this out of the way: we do not expect any improvement in lithium production for at least another five years. Lithium prices skyrocketed exponentially last year, and there were acquisitions of what we consider the last two interesting projects left in Argentina, namely Neo Lithium and Millennial Lithium.
Furthermore, in 2021, the sector, for the first time in many years, did not face financing problems, and companies were able to secure funding and embark on new projects. However, the biggest problem and the main reason we believe that markets will have to prepare for a chronic deficit in the lithium sector in the coming years is the lack of qualified workers in sufficient numbers. Pilbara, an Australian lithium company, provided evidence of this in December when they announced they would miss their forecasts for the current fiscal year and reduce them for the next year due to a lack of qualified personnel. If there is already a shortage of qualified personnel in Australia, the world's largest lithium-producing country, we can imagine the prospects for well-trained personnel in the rest of the world. Considering that the last two brine projects in Argentina have been acquired this year, it is clear that there will be no massive new projects brought into production from either Australia or South America in the coming years.
While there are new extraction methods on the technical side that require less personnel, they are promising in the laboratory but still far from being used in commercial production. Therefore, the only hope for global efforts to advance electric mobility as quickly as possible is the United States and Canada, but they still lack the capacity to potentially convert mined lithium concentrate into battery-grade lithium hydroxide or lithium carbonate. Hence, there will continue to be a chronic lithium deficit in the coming years, and we expect further increases in lithium prices. We anticipate increasing volatility in mining stocks and more acquisitions. In the last six months alone, new players like Zijin Mining, Uranium One, and Rio Tinto ventured into the lithium sector, and we believe this is just the beginning of a massive wave of acquisitions.
In conclusion, we see 2022 as another year where supply will not be able to keep up with exponentially growing demand. Thus, we expect another very positive year for lithium stocks, with the anticipation of increased volatility.
The precious metals sector remained below expectations last year despite rising inflation concerns and a strong negative real interest rate. It is only thanks to good stock selection that the Commodity Capital Global Mining Fund was able to end the year with a small profit. One of the main reasons for the weak performance of precious metals is undoubtedly that few investors saw the need to hedge themselves and their portfolios last year. Yes, inflation is rising, but as long as the stock markets continue to perform positively, everything seems fine. In addition, Bitcoin now offers an alternative, particularly among the younger generation, which is preferred over gold and has diverted capital that would otherwise have flowed into gold. I won't go into the Bitcoin versus gold discussion any further, as we believe it is far too early to view Bitcoin as an alternative to gold, and the massive volatility in Bitcoin is contrary to what gold investors seek: a safe haven not subject to those 10% daily jumps. Regardless of the further development of Bitcoin, we see its influence on the price of gold in 2022 as significantly less. On the other hand, ongoing strong inflation, which we do not see as temporary but as permanent, will provide strong impetus to the gold price in 2022. Similar to lithium in recent years, we currently see that investors are completely ignoring the fundamentals, and we see 2022 as a year in which the gold price should perform significantly better than predicted by all analysts and banks. Research from banks and analysts is often one of the best contraindicators for annual forecasts. In our view, the Fed's tapering will also be limited, and it remains to be seen whether the predicted three interest rate hikes next year will occur or not. One thing is for sure: the times of 5.6 or 7% interest rates are definitely over for the next 10 years, and it is doubtful whether the USA and the rest of the world can afford even interest rates of 2.5 or 3%. Interest rates will, in our view, remain below 1% in 2022, and real interest rates will remain significantly negative. The conditions for a massive increase in the price of gold have been established, and the mining companies have never had better fundamentals than they do today. Mines are making a margin of $800 to $900 at a gold price of $1,800 per ounce, and they will be able to expand their dividends or share buyback programs next year. The only sword of Damocles hanging over the sector is the continued lack of new discoveries. If Kinross is willing to pay CAD 1.8 billion for a company that does not even have a resource estimate, this already says a lot about the current state of the market. There are almost no significant large projects in politically stable regions anymore, and it will only take a small spark to cause the entire precious metals sector to surge significantly in the coming year.
We look back on a very successful year in 2021 and do not see the prospects for 2022 as worse. The lithium sector will become more volatile, but we still see enormous potential on an annual basis. In 2022, it could be the year for the precious metals markets if markets perform weaker than expected overall, interest rate hikes fall short of expectations, and inflation does not disappear