Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
After Republican presidential candidate also former US President Donald Trump was declared the winner of the US presidential election on early morning of November 6th local time, spot gold prices fell to $2,689.98 per ounce on Wednesday, dropping below $2,700 per ounce for the first time in nearly two-and-a-half weeks. Meanwhile, the price of bitcoin surged to a record high of $75,500.
Commodity markets declined as Trump’s victory boosted the dollar, with crude oil prices initially dipping 3.1 per cent before recovering ground on speculation that the new U.S. administration could exacerbate the conflict in the Middle East or impose tougher sanctions on Iran.
Crude oil is the only asset class that doesn’t have a clear direction after Trump’s victory, said Rebecca Babin, senior energy trader at CIBC Private Wealth Group.
Oil prices have gained some support as the market has renewed concerns about stability in the Middle East and fears that if Trump succeeds in imposing sanctions on Iranian oil exports, it could lead to supply disruptions. Coupled with the fact that Hurricane Rafael could affect U.S. oil production of around 1.6 million barrels per day in the Gulf of Mexico.
Trump’s victory is undoubtedly a major boon for the cryptocurrency industry, as Trump has repeatedly expressed a strong pro-cryptocurrency stance while Harris’ win could mean tighter regulation. In July, Trump had announced at the Bitcoin 2024 Conference that he would make Bitcoin a U.S. strategic reserve asset if he were to return to the White House.
It is worth mentioning that Trump’s running mate and future U.S. Vice President James Vance is also a venture capitalist who is bullish on cryptocurrency investments, and has bitcoin in his personal portfolio.
Market participants believe that Trump’s victory has ignited risk sentiment, with all three major U.S. stock indexes closing higher today, with the Dow Jones Industrial Average jumping more than 1,500 points. The last time the Dow jumped more than 1,000 points in a single day was in November 2022. Therefore, it is not hard to explain why gold as a safe-haven asset was sold by investors today.
In addition, a headline report in Barron’s wrote today that a Trump victory could spur inflation and make the Fed more hawkish. This article states that Trump’s promised trade tariffs “could boost inflation and cause potential supply or demand shocks.”
Stephanie Pomboy, founder of MacroMavens, reminds investors that they shouldn’t forget about concerns about the economic situation in the U.S., given the country’s nearly $36 trillion federal debt level.
Meanwhile, the risks associated with the banking sector could force the Fed to adopt some form of quantitative easing sooner than expected. Pomboy stressed that the strength of the dollar is unsustainable in the long run, given the persistence of deficits in the United States and the growing trend towards de-dollarisation in the international community.
The Federal Reserve will announce the results of the November FOMC meeting tomorrow, it is expected to cut interest rates by 25 basis points.
Among other commodities, copper prices fell nearly 4 per cent today, marking the largest intraday decline in five months; silver prices fell $1.32 to $31.43 per ounce.
