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Kitco News has launched its 2021 Outlook, which offers the most comprehensive coverage of the precious metals markets for the new year. Billions of dollars have been injected into financial markets in 2020 and this will not be without consequences. Economists expect investors to prepare for inflation in 2021.
(Kitco News) – Investment demand for gold and silver shot all cylinders in 2020 as US Mint data shows demand for gold bars and silver coins peaked high level in four years.
According to its latest sales figures, the US Mint has sold 884,000 ounces of gold in various denominations of its American Eagle gold coins. Physical demand for gold has increased more than fivefold, up 455% from the 152,000 ounces sold in 2019.
Sales of gold coins hit their highest level since 2016 when the Mint sold nearly 2 million ounces of gold that year.
As for the silver market, the US Mint has seen its silver sales more than double compared to last year. According to the figures, the U.S. Mint sold 30.01 million ounces of silver, up 101% from 2019.
Not only has demand for gold and coins peaked in four years, currencies around the world have struggled to deliver their products as supply chains are significantly disrupted due to global lockdowns. adopted by governments to try to slow the spread of the deadly virus. .
According to the US Mint, the busiest month was March. It sold 151,500 ounces as the global economy was devastated by the COVID-19 pandemic. Analysts said investors flocked to precious metals as a safe haven as equity markets faced unprecedented selling pressure in March.
Peter Hug, global business director for Kitco Metals, said he was not surprised investors took to gold and silver in March. He added that premiums for gold and silver coins reflected increased demand as supply fell sharply. He noted that with silver trading around $ 12 an ounce, premiums for the US Silver Eagles hit $ 12 an ounce.
“There was a lot of fear out there and some investors thought the best way to protect themselves was with physical metal,” he said.
Hug added that improving investor sentiment has helped bring premiums for gold and silver back to around pre-COVID-19 levels.
The second most important month for gold coin sales came in August, another historic period for the precious metal. Investors bought physical gold as prices hit new records above $ 2,000 an ounce.
The US Mint said it sold 121,000 ounces of gold in August.
Looking ahead, Hug said he expects demand for gold and coins to continue to remain strong through 2021.
He added that gold could be sensitive to sharp corrections in the stock markets as investors sell their precious metals to increase liquidity. However, despite any short-term sell-off, the macroeconomic picture looks solid in 2021.
Not only will demand for gold and silver coins benefit from further stimulus, but in the second half of the year, precious metals are expected to be dragged down by inflationary pressures.
“I think another stimulus deal is needed to get us across the bridge and where the economy starts to normalize,” Hug said. “Once the economy begins to normalize, the amount of pent-up demand will be so large that you will have to argue that inflation will rise dramatically. Central banks will be behind the inflation curve and it will be good for gold and silver. “
Hug is not alone in his optimistic outlook for gold and silver. Many analysts expect gold prices to far exceed their recent all-time highs. Some banks are claiming prices averaging $ 2,300 an ounce this year.
Silver is also expected to outperform gold, and many analysts have said they are looking for prices well above $ 30 an ounce. Some analysts are seeing silver rebound beyond all-time highs above $ 50 an ounce.
Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.
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