Gold has a renewed shine on the market as the collapse of the Silicon Valley Bank (SVB) collided with concerns regarding further federal interest rate hikes to form a perfect storm of economic turmoil that saw investors take shelter with the safe-haven metal.
Gold has been rising slowly but surely since November of last year, but the collapse of SVB lead to a sharp jump of just under 10 per cent to trade at US$1993 (accurate as of 10:17 am) per ounce, its highest since March of last year. This interest in gold in the commodity market has also hit gold explorers on the stock market, with a number of big and small gold players feeling the blowback as investors rush in on safe bets.
(Monthly gold price, accurate as of 10:17 am)
Following the collapse John Reede, Chief Marketing Strategist for the World Gold Council, stated that “concerns about systemic risks to bank deposits – whether warranted or not – may lead to investors moving some of their currency holdings into gold. A sign of this was the 16t (US$1bn) of inflows into global gold ETFs this week so far,”
It seems almost clockwork at this point, with gold interest flaring up in the face of geopolitical and economic turmoil only to be abandoned shortly after everything calms down with the World Gold Council outlook for 2023 stating that “if the past five years have taught us anything it is that shocks – trade war, COVID, the war in Ukraine, and so on – can appear from left field to upturn even the most considered economic forecasts.”
(Gold price over the past five years, Accurate as of 10:17 am)
Looking at the gold price, you can see a major price jump to US$2068.8/oz in August of 2020 as the global COVID-19 pandemic combined with protesting in the US and a particularly tumultuous US presidential race into a concoction that sent investors running for the golden hills.
A similar rise can be seen in February of last year as the Russian invasion of Ukraine brought concerns of a wider conflict between Russia and NATO countries, with gold once again providing an economic safe haven and having its price break the US$2000 mark.
“While macro factors form the basis for much of the impact on gold, geo-political flare-ups could lend support to gold investment, as we saw in Q1’22, as investors look to shield themselves from any further turbulence.”
While these surges in the metals price drop once tensions have passed, it never drops off completely. Since breaking the US$1600 per ounce mark in May of 2020, it hasn’t dropped below that point, with it now breathing down the neck of the US$2000/oz mark once again.
With investors’ eyes on gold again amid an ongoing period of geopolitical and economic uncertainty, their eyes will also be on the juniors dedicated to unearthing the safe-haven metal.
Shares for Africa-focused gold giant Perseus Mining were trading at $1.96 as signs of SVB’s coming collapse began appearing on the 10th of March and by the time the smoke had cleared on the 20th, Perseus’ share price had jumped 18.36 per cent to trade at $2.32.
Tombola Gold is now pouring at the GAM processing plant and has recently completed a second pour, realising $724,000 of revenue after refining, ahead of many more coming from an Mt Freda complex packed with gold assets in the Cloncurry district of Western Queensland.
Infinity Mining has also been on the rise, trading at 1.9c after marking a 15.15 per cent increase over the past week as the ASX-listed explorer zero’s in on golden targets in Western Australia’s central goldfields, delivering grades up to 8.67 g/t Au from extensive reverse circulation drilling campaign.
Taiton Resources is also positioned to take advantage of a gold comeback as things begin to heat up at the explorer’s Lake Barlee Project in prosperous Western Australia, with the kicking off of an airborne magnetic survey over the Lake Barlee Project belt to aid in the delineation of gold drill targets.
International explorers are also looking to capitalise on gold’s renewed strength, with London-based First Development Resources aiming to strike big at its Wallal Gold-Copper Project in the world-class Paterson Province, home to Rio Tinto’s 503 Mt North Winu Project.
Most exciting about Wallal is that the project continues to show similarities to Greatland Gold’s Havieron project, which recently delivered an updated MRE of 85Mt at 2.0g/t Au and 0.26% Cu, with geophysical anomalies identified at Wallal sharing numerous characteristics with those uncovered at Havieron.
With these exciting projects unfolding as gold reaffirms itself on the market, it’s looking to be a compelling year for the gold sector.