It is likely a bit too early to say whether the banking crisis in the U.S. is contained or over. At the end of April, the collapse and rescue of yet another bank, First Republic Bank, is clear evidence that risks remain.
Once again, regulators intervened and a more catastrophic failure was averted. However, it is another sign of the current fragility of the global financial system. Even if this was the end of the banking turmoil, which appears unlikely, these recent developments expose the significant stress imposed on the economy by higher interest rates and certainly worsen and accelerate the chances of a recession or hard landing. It also makes it very clear that, like the banks, other sectors of the economy may be vulnerable, increasing uncertainty and volatility in the markets. This is supportive of gold prices.
MVIS® Global Junior Gold Miners Index
5/8/2022-5/8/2023
Source: MarketVector IndexesTM. All values are rebased to 1,000. Data as of May 8, 2023.
About the Author:
Ima Casanova joined VanEck in 2011. Before VanEck, Ima was Managing Director and Senior Equity Research Analyst at McNicoll Lewis & Vlak and established the firm's metals and mining research department. Previously, she was Equity Research Analyst at Barnard Jacobs Mellet USA and BMO Capital Markets and held positions as Production Technologist, Offshore Wellsite Supervisor, and Petroleum Engineer for Shell Exploration and Production. Ima has both an MS and a BS (magna cum laude) in Mechanical Engineering from Case Western Reserve University.
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