Miningweb weekly: The case against the gold price (and why Orion surge is justified)

In the year’s first episode of our weekly engagement, Peter Major explains how, unlike oil or copper, which are driven by physical industrial use, the current gold price is being driven almost entirely by investors hoarding it. He refers to long-term gold price graphs to explain why those buying gold today are taking a huge risk of making substantial losses. There’s also a cameo on why the surge in Orion shares (which is in the BizNews Ricardo portfolio) is justified..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here:.Listen here:.By BizNews reporter.Mining analyst Peter Major is not known for hyperbole. In fact, his reputation has been built on caution, long-term cycles and an instinctive distrust of anything that looks too good to be true. That makes his outlook at the start of 2026 worth taking seriously.Speaking to Alec Hogg in the first MiningWeb Weekly of the year, Major made one thing clear. Investors are starting the year at levels that leave very little room for error. Almost every major asset class has been dragged higher, and history suggests that when everything rises together, risk is quietly building beneath the surface.Last year began with optimism and relatively sensible pricing. This year begins with record highs across the board. Gold is touching all-time highs. Silver has surged far faster than gold. Equities, bonds and property have all delivered dollar returns north of forty percent in a single year. Even smaller stocks that have not earned those gains on fundamentals have been pulled up by the sheer momentum of global markets.Major describes it as a freight train effect. Once the big indices gather speed, everything in their slipstream rises, whether it deserves to or not. That, he says, is precisely when investors should slow down rather than chase.Gold remains central to the discussion. Major shared a long-term comparison between gold and cash that should make even committed gold bulls uneasy. At current levels, gold sits at the same extreme relative to money market returns as it did in 1980. Back then, anyone who bought gold waited more than two decades before matching the return they would have earned by simply sitting in cash.The lesson is not that gold is worthless. It is that gold moves in very long secular cycles. From 1980 to the early 2000s, gold steadily underperformed cash. From the early 2000s until now, it has done the opposite. The danger is assuming that trend can continue indefinitely.Major likens the current moment to a warning system rather than a crash signal. When a fighter jet’s radar begins to beep, it does not mean a missile has already hit. It means something is locked on, and the pilot needs to pay attention. Gold, he says, is now in that territory.When gold is compared to equities, the message is similar. Over the long run, equity markets outperform everything else because they constantly renew themselves. Poor companies fall out of indices and stronger ones replace them. Gold, by contrast, does not compound. It spikes, corrects and then waits.Gold has outperformed the S&P 500 for roughly a decade, which is already a long run by historical standards. Major expects equities to reassert themselves eventually, even if gold remains strong for a while longer.Silver is even more unsettling. Its move bears striking similarities to the 1980 silver spike driven by the Hunt brothers. Today, Major believes the pressure is coming from paper markets that have written far more contracts than there is physical metal available. If holders begin demanding delivery rather than rolling positions forward, the system comes under stress.That kind of stress does not resolve slowly. It resolves suddenly, either through rule changes, forced settlements or sharp price reversals. Major expects some form of reckoning within the next few months rather than years.The same theme appears when gold is compared to oil. Historically, gold has traded at around seventeen times the oil price. Today, that ratio is closer to seventy. It has only been there once before. Oil consumption has not collapsed. Demand remains strong. What has changed is investment behaviour. Money is flowing into gold because investors believe it must keep rising.Investment demand, Major warns, is infinite on the way up and ruthless on the way down.For investors asking how far prices could fall, his answer is blunt. Assets that double can halve. Gold near four thousand five hundred dollars could easily retreat to half that level without breaking long-term trends. The risk today, he argues, is not missing further upside. It is locking in real losses if sentiment turns.Against this cautious backdrop, there are still pockets of opportunity. Major remains constructive on copper, particularly projects with strong fundamentals and realistic production plans. Orion Minerals is a case in point. After years of frustration, the company has secured credible funding partners, experienced management and a clear path to production. With copper prices elevated and funding largely in place, the risk profile has changed materially.South Africa’s structural advantage also remains intact. When commodity prices fall, the rand weakens, cushioning local producers. That buffer has historically allowed South African mines to survive cycles that would wipe out higher-cost competitors elsewhere.Platinum group metals are another bright spot, although Major approaches them with the same caution he applies to gold. Recent price surges have been driven by investment demand rather than sudden shifts in industrial use. That makes them volatile. Still, South Africa controls the supply, and when production tightens, the market responds quickly.Major’s closing message is not pessimistic. It is disciplined. Markets do not move in straight lines forever. Extreme valuations demand humility. Cash, he says, is no longer something to apologise for. In an environment where warning lights are flashing across multiple asset classes, patience may prove to be the most valuable investment of all.

Miningweb weekly: The case against the gold price (and why Orion surge is justified)

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