Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
On the eve of the U.S. election, financial markets are unusually quiet, contrasting sharply with traders’ anticipation of election-induced volatility, and the gold market is no exception. On Monday, gold prices continued the narrow fluctuations from the previous session, closing almost flat at $2,736.48 per ounce. The reason for this is the tight race between Democratic candidate Harris and Republican candidate Trump, creating a wait-and-see atmosphere as the market eagerly awaits the election results.
This U.S. election is full of uncertainty, with polls showing candidates nearly evenly matched and clear policy differences, potentially having a significant impact on the precious metals market.
Gold, being an important safe-haven asset, sees its price affected by these complex election dynamics, but the greatest catalyst for an increase would be a highly contested result leading to political turmoil and market uncertainty. Christopher Louney, a commodities strategist at RBC Capital Markets, emphasized this risk, noting that a contested and prolonged election outcome could present an upside risk for gold prices, especially in the short term. Investors might look at gold’s historical performance during crisis periods for potential trends.
Considering the long-term impact of the election on the gold market, the issues of U.S. debt and deficits, and the candidates’ attitudes towards these issues cannot be ignored. For instance, Trump’s economic policies focus on large-scale tax cuts to stimulate growth, potentially worsening the fiscal deficit. Regardless of whether it is Trump or Harris, neither seems overly concerned with the rising U.S. debt levels, which could be a major catalyst for a long bull market in gold.
Craig Hemke from TFMetalsReport.com states that irrespective of who becomes president or which party controls Congress, the U.S. debt situation won’t change. He believes the U.S. economy is heading towards a recession, with tax revenues plummeting as spending rises, leading to expanding deficits and debt. Therefore, regardless of the election outcome, to preserve financial security and purchasing power, one should continue buying gold and silver.
Meanwhile, this week’s Federal Reserve meeting adds to the gold market’s complexity. The Fed previously cut rates by 50 basis points, and analysts widely expect a 25-basis point cut this time. While this cut might be less aggressive, theoretically, lower rates typically boost the appeal of non-yielding assets like gold.
The stark differences in candidates’ policy proposals mean the U.S. election result will shape future economic policies and global geopolitical relations, thereby having a lasting effect on gold prices. Given such high risks and uncertain outcomes, the value of gold as a hedge against uncertainty will become increasingly pronounced post-election.
