Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
Over the past 50 years, the price of gold has hit an all-time high and then plummeted by more than 50 per cent twice in history, in 1979 and 2011. However, after the precious metal hit record highs several times in 2024, some analysts and industry insiders are believing that gold’s current price levels are sustainable and there is little chance of a significant drop.
In a report to clients this week, precious metals analyst Tim Zyla noted that the main difference between the current significant uptick in the price of gold, as compared to the previous two rises, is obvious, since there have been no major or catastrophic events that have caused the ongoing price rise. Inflation is real, of course, but nowhere near the levels of 1979, and not many people now believe that the entire financial system will collapse as it could did in 2011.
He concludes that both the 1979 and 2011 declines in gold from their peaks were relatively swift and violent, with little time for retail investors to react, but this is unlikely to happen again due to the more subdued nature of this gold rally. While a short-term correction is always possible, with the Fed hinting at easing monetary policy, there is little to suggest that gold won’t continue its upward momentum this time around.
Gary Wagner of TheGoldForecast.com shared his outlook on the aftermath of the gold market this week, suggesting that the price of the precious metal will rise to the $2,700 per ounce level by the first quarter of 2025.
Wagner noted that the Fed’s upcoming interest rate turn is significant for gold, not just in terms of signalling a September rate cut, but also in terms of a major turnaround from a highly tight monetary policy to a highly accommodative one, and with the ultimate goal of normalising interest rates, which lays the foundation for gold prices to remain at elevated levels for the long term.
Ole Hansen, head of commodities strategy at Saxo Bank, said in a report to Bloomberg that the temptation is rising for traders to take profits after a long rally as U.S. economic data failed to give gold any further boost. Inflation data to be released on Friday could provide clues as to how quickly the Federal Reserve will cut interest rates.
Jun Rong Yeap, market strategist at IG Asia Pte. thinks gold prices seem to need a short-term breather after surging to new record highs last week, and the market may need to see weaker economic data to justify a big interest rate cut, which should keep gold prices well supported.
