Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
The current phenomenon in the gold market is peculiar, with continuous net outflows from gold exchange-traded funds (ETFs) while central banks around the world, particularly those in emerging economies including the People’s Bank of China, are engaging in significant purchases of gold. This trend shows no signs of slowing down or reversing. Recent data indicates that in February 2024, the Chinese central bank once again purchased 12 tons of gold.
Simultaneously, gold prices have recently surged, breaking through a historic high of $2,160 per ounce.
Krishan Gopaul, a market analyst at the World Gold Council (WGC), cited the latest data from the People’s Bank of China, stating that China’s current gold reserves total 2,257 tons, marking continuous growth for the 16th consecutive month. Since November 2022, China has acquired 297 tons of gold. However, the proportion of gold in the country’s total reserves remains just over 4%, indicating analysts’ anticipation of China’s continued gold acquisitions in the visible future.
Ryan McIntyre, a managing partner at Sprott, recently expressed his belief that the buying strength of central banks worldwide will not wane. This is attributed to the increasing challenges of holding foreign currencies in a world characterized by growing divisions and uncertainties.
Nevertheless, data from the World Gold Council reveals that in January 2024, global gold ETFs recorded net outflows of approximately $2.8 billion, reducing total holdings by 51 tons to 3,175 tons, marking the 8th consecutive month of outflows. North American funds led this exodus with net outflows of $2.3 billion. Conversely, Asian funds dominated by China have been buying gold for 11 consecutive months.
Gold ETFs and similar products constitute a significant portion of the gold market, with their flows usually highlighting short-term and long-term perspectives as well as the desire to hold gold.
Since 2023, gold prices have been fluctuating upward due to factors such as decreasing inflation risks in the United States, earlier expectations of interest rate cuts by the Federal Reserve, increased geopolitical tensions, and rising safe-haven sentiment. Each major bull market in gold historically coincides with the strengthening of gold’s monetary attributes, reflecting the ebb and flow of power dynamics in the international monetary system.
Looking further ahead, the global trend towards “de-dollarization” is evident in the decline of U.S. dollar foreign exchange reserves and the rise in gold reserves. Prospects suggest that gold prices are still within an upward trajectory. Many analysts have pointed out that amid various unfavorable conditions, the continual demand from central banks around the world is a key factor enabling gold to hold the critical $2,000 mark.
