Gold prices hit new record high of $2,900 per ounce on Wednesday (February 5th), with the most actively traded Nymex April gold futures closing at $2,893 per ounce, up 0.62 per cent from the previous trading day.
Factors driving gold prices include the threat of U.S. tariff policy, geopolitical turmoil that remains unimproved, and central banks increasing their gold holdings, making investors continue to be optimistic about gold’s safe-haven attributes and upside prospects.
Speaking to Kitco Mining on the sidelines of the Vancouver Resource Investment Conference, Grant Williams said that a major shift in the global order is underway, and there are already signs that investors are beginning to put money back into commodities.
He noted that the stock market, especially tech stocks being overvalued, and because currencies are depreciating at a rapid rate, investors want to own physical assets. Precious metals, especially gold, are a safe haven in the current environment. Silver will catch up at some point, but it’s largely safe-haven buying that’s driving behind gold. With renewed political leadership in Canada and the U.S., energy markets also have potential in this environment.
Williams also pointed out that the global landscape is changing, with conflict increasing around the world and US influence over the world diminishing. He emphasised the importance of reorganising supply chains in key mineral sectors, which could be highly inflationary.
On Tuesday, in response to US President Donald Trump’s announcement of additional 10% tariffs across the board on Chinese imports, China’s Ministry of Commerce unveiled a series of retaliatory measures against the United States, including restrictions on the export of five key metals used in defence, clean energy and other industries.
The Chinese government’s new export controls target tungsten, tellurium, bismuth, indium and molybdenum, stipulating that export licences can only be granted to companies that comply with “relevant regulations”.
The United States is a major producer of molybdenum, a metal used to strengthen steel and reduce corrosion, and imports of molybdenum from China are negligible, according to the latest data from the US Geological Survey (USGS). And over the past four years, the U.S. has imported less than 10 per cent of its indium from China, with South Korea, Japan and Canada emerging as major suppliers.
However, because the United States stopped mining tungsten, which is critical for alloys and speciality steels, a decade ago, and has not produced refined bismuth since 1997, it is completely dependent on imports for both materials. Despite the declining share of tungsten imports from China, the country remains a major supplier, and any sudden disruption could be detrimental to U.S. industries that rely on this resource.
Eric Strand, founder of precious metals company AuAg Funds, expects silver to retest its 2011 all-time high near $50 an ounce as the price of gold continues to hit new all-time highs. Strand believes silver is still struggling to get out of gold’s shadow, with the gold-silver ratio currently above 88 compared to the long-term historical average of 60, silver’s upside still exceeds that of gold.
