After the gold rush

By Mark Burgess | February 17, 2021 | Last updated on November 29, 2023
2 min read
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After reaching an all-time high last summer, gold has drifted lower as bond yields recover and investors eye a broad economic rebound. But the outlook for the precious metal remains strong, a CIBC analyst says.

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Gold peaked above US$2,000 per ounce in August before investor optimism about a vaccine rollout and the pandemic’s end dampened sentiment toward the resource, said Daniel Greenspan, senior analyst and resource team director with CIBC Asset Management.

“Some of the speculative risk positioning in gold has come off, which has weighed on the price,” he said in a Jan. 25 interview. This week, gold was trading below US$1,800 per ounce.

Greenspan, who manages the CIBC Precious Metals Fund, put forth two vaccine scenarios — both of which could be supportive for gold.

A speedy rollout could lead to a rush of consumers returning to the market and driving up inflation. With the U.S. Federal Reserve committed to maintaining low interest rates, “higher inflation and lower rates would drive negative real rates that should be supportive for the gold price,” he said.

If vaccine distribution takes longer than markets expect, accommodative monetary and fiscal policy would likely be extended.

“Interest rates should remain low, government stimulus and spending should remain high, both of which should also be supportive for gold,” he said.

There are a number of risks to the outlook, though. Interest rates rising faster than expected could lead to a stronger dollar, Greenspan said, or surging equity markets could continue to drive outflows from gold into more risky assets such as base metals and energy. Lack of inflation could also be a headwind.

As for gold companies, he said equity valuations “remain reasonable” with managers acting more responsibly.

“In the past, gold miners have been viewed as poor allocators of capital,” Greenspan said. “But so far through this bullish commodity price cycle, we’ve seen measured and well-considered [mergers and acquisitions], we’ve seen dividends grow and we’ve seen buybacks active.”

Some of the names he likes in the space include large-cap firm Newmont, which in January announced a $1-billion buyback; mid-cap players Endeavour Mining and SSR Mining; and small cap Pure Gold Mining, an “under-followed and under-covered” company expected to enter commercial production this year.

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Mark Burgess

Mark has been the managing editor of since 2017. He has been covering business and politics for more than a decade. Email him at