After the golden year of precious metals, silver is expected to shine in 2021

(Reuters) – After a spectacular year, precious metals should see further gains in 2021 as silver is expected to outperform, but analysts are increasingly cautious about the outlook for gold as the global economy recovers of the impact of the coronavirus.

The pandemic has triggered stockpiling by investors seeking to protect their wealth. That, along with supply shortfalls, has pushed gold and palladium prices up over 20% this year, while silver is up 47% and platinum by 10%.

“We are going to see new records for gold and palladium (in 2021),” said Philip Newman of consultant Metals Focus.

“But the money will see the biggest payoffs,” he said.

(GRAPHIC – Precious metal price performance in 2020 🙂

Traditionally regarded as a safe place to store silver, gold began to rise as economic growth slowed in 2019, but the pandemic accelerated the rally and in August prices hit a record high of 2,072.50 $.

As demand for physical gold has been hammered as the virus forced closures, investment demand has increased, as evidenced by the holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, which recorded its biggest annual gain since 2009 at around 30%.

(GRAPHIC – Participation in SPDR Gold Trust versus the price of gold 🙂

Prices then fell to around $ 1,900 as investors stopped buying and vaccines rolled out against the virus, encouraging investment in assets that perform well during times of economic growth.

Huge government debt, negative real bond yields and threats of inflation and market turmoil, all of which back gold, will persist into 2021, said Ross Norman, an independent analyst. Gold could rise another 20% next year, he said.

(GRAPHIC – Real US Yields Against Gold 🙂

A safe haven asset like gold, but also an industrial metal used in products like solar panels, silver fell from $ 18 an ounce in January to nearly $ 30 in August before slipping to around $ 25.

Analysts say its dual role and greater volatility means it may fare better than gold as economic growth picks up, and that US President-elect Joe Biden’s push towards clean energy is an incentive to greater use.

(GRAPHIC – Gold / Silver Ratio 🙂

Investors have absorbed excess platinum, which is also used in jewelry, industry, and auto manufacturers to reduce pollution.

But they are unlikely to do so again, especially as supply, which has fallen due to the novel coronavirus, is rebounding, said Rhona O’Connell, analyst at StoneX.

This will likely weigh on prices, which at around $ 1,000 an ounce are only slightly higher than at the start of the year.

The automotive industry uses four-fifths of palladium, which, like platinum, neutralizes engine emissions. It is little used for investment.

Years of under-supply drove prices to a record high of $ 2,875.50 an ounce in February. “The market thought it might run out of metal,” said one trader.

Most analysts expect deficits to continue into 2021 as the global economy recovers and auto sales rebound.

(GRAPHIC – Performance of precious metals in 2020 🙂