Analysts reckon gold will punch through $US2000 by year-end
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The bulls are out and running with gold futures smashing through the $US1,800 barrier, its highest finish since 2011, thanks to the ongoing uncertainty caused by the COVID-19 pandemic.
Gold for August delivery climbed 1.1 per cent to settle at $US1,800.50 an ounce, or about $2,606.71 an ounce in Australian dollar terms, and there is every reason to believe that it will only continue climbing.
A quick poll of analysts by Stockhead found that the majority believed that gold would easily exceed $US2,000 an ounce by the end of this year.
Minelife senior resources analyst and founding director Gavin Wendt says gold is benefiting from the growing concern that COVID-19’s immediate and longer-term impacts on global economies have been badly underestimated.
Along with other drivers such as the trillions of dollars of stimulus that central banks are feeding into the economy and the possibility of negative interest rates in the US, Wendt believes the next milestone is the all-time record of around $US1,920 an ounce.
RM Corporate Finance director and responsible executive Guy Le Page believes there is every chance of seeing a run on gold well in excess of $US2,000 by the end of the year or even sooner.
This is due to pending economic shocks such as projections of economic recovery along with trade and political tensions.
Meanwhile, Simon Popple of UK-based Brookville Capital also believes that with all the money printing and uncertainty in the market, gold is likely to exceed $US2,000 an ounce in 2021.
Infinigold chief executive officer Jon Deane reckons the gold price could hit $US2,000 an ounce this year and between $US2200 and $US2300 by early next year.
And they are not alone.
Citibank and Goldman Sachs have previously forecast that gold prices would push to $US2,000 an ounce in the medium term, while the Bank of America was decidedly more bullish, raising its 18-month price target to $US3,000 an ounce in April.
With gold prices trending as they are, companies that were previously involved in other commodities are now entering the sector at a rapid pace.
One-time battery hopeful HIPO Resources (ASX:HIP) has now signed a binding heads of agreement to acquire a 70 per cent interest in Zamia Resources, which owns four exploration permits in Queensland that include two historical open pit mines.
The permits cover 115sqkm in the Drummond Basin, a region that has an endowment of more than 6.5 million ounces of gold and a long history of mining.
The two mines on its permits produced about 93,000 ounces of gold in the late 1980s to early 1990s.
HIPO says the Lucky Break mine is open on all sides and was mined to just 30m depth, with potential for the discovery of further economic resources.
Meanwhile, the Belyando deposit hosts an envelope of gold mineralisation about 280m long and up to 160m wide.
There is also potential for new gold mineralisation to be defined through the assessment of multiple high-order gold-arsenic soil anomalies.
Base metals-focused Victory Mines (ASX:VIC) has reached a deal to earn up to an 80 per cent interest in the past producing Coogee gold mine near Kambalda, Western Australia.
The mine currently contains a resource of 96,000 tonnes grading 3.4 grams per tonne (g/t) gold.
Victory Mines says the project hosts advanced exploration targets with excellent potential along strike and at depth. It also benefits from proximity to existing producers with established infrastructure and operating mines.
They join companies such as Volt Resources (ASX:VRC), which signed a binding terms sheet to acquire the Luiri Hills project in Zambia in May, and Graphex Mining (ASX:GPX), which is earning up to 80 per cent in two exploration projects in Mali.