Gold and Silver Supply and Demand in 2021

gold and silbver supply and demand in 2021
gold bars

The supply and demand basics for precious metal markets got tossed into disarray this year, resulting in heightened volatility– initially on the drawback, then on the upside. Will the gold and silver supply and demand in 2021 will be such that will drive the prices of the two assets higher?

The Gold and Silver Supply and Demand in 2021

Although gold and silver will complete 2020 listed below their highs for the year, the gold price will end up with a yearly return of nearly 25%; and silver around 45%.

Can Precious Metal Investors Expect More Price Appreciation in 2021?

Yes, however,  there are some near-term threats to the favorable long-lasting supply/demand outlook.

Assuming financial conditions begin stabilizing next year, we would anticipate demand– specifically from commercial users– to increase. Mine production is expected to rebound also.

The mining market, like numerous others, faced extraordinary operational challenges in 2020 due to COVID-19 interruptions. Many mines around the world were required to scale back or suspend production in the first half of the year.

By the third quarter, mining output among significant producers started to ramp back up. In general, however, the top 20 gold miners will end up in 2021 with an approximate 5% drop in output.

The mining industry is issuing positive assistance for 2021. Whether it fully recuperates to pre-covid19 numbers remains to be seen.

While mine supply is likely to increase versus 2020, so is consumer demand for refined precious metals items such as fashion jewelry. The financial investment need for bullion will, as usual, be a wild card that could move the marketplace at the margins.

A related wild card is the COVID-19 virus. Epidemiologists hope something near herd resistance can be reached through mass vaccinations. However, the virus stays unforeseeable and might mutate into numerous new strains.

Virus dangers, political dangers, and inflation risks originating from the Federal Reserve‘s unrestrained printing of money and the European Central Bank’s money flooding are all potential drivers for safe-haven investment purchasing of precious metals.

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Silver’s 2020 Historic Low Could Turn to a Historic High in 2021

A massive rise of investment demand hit the bullion market this spring as panic gripped Wall Street and bargain hunters came out in numbers.

What occurred was a once-in-a-generation event. Some markets reached unprecedented extremes that defied centuries of recorded history.

For instance, crude oil futures traded deeply into the unfavorable area for many months. Silver got historically oversold versus gold, as the gold-silver ratio surged to as high as ever prior to being seen at 130:1.

Near the outright bottom of the market on March 17th, we wrote, “Never has silver been as low-cost to acquire in genuine terms as it is today. Never has the silver market traded so extremely detached from its fundamentals.”

That post recommended we had actually hit “peak fear”– out of which “a new uptrend in silver, and a corresponding constricting of the gold/silver ratio, can be expected to extend for many years.”

The very next day, March 18th, silver struck its outright low point for the year at $11.75/ per troy ounce. It went on to surge as much as nearly $30/per troy ounce in August.

A less remarkable 2021 may be the case. However, an international economic recovery and return to some form of normalcy would assist in stimulating demand for commercial metals along with silver, platinum, and palladium.

A major trend set to accelerate in the months ahead is the move away from nonrenewable fuel sources and toward electrification.

Solar energy and battery technologies are experiencing explosive growth, and with that development comes a need for lots more copper, nickel, silver, and strategic metals. In fact, photovoltaic panels are among the fastest-growing sources of silver demand.

The “green” programs of the incoming Biden administration, paired with ongoing fiscal and monetary stimulus into the economy, could have the unexpected repercussion of stimulating metals markets.

Demand can grow a lot more quickly than supply. Some analysts expect to see broadening supply deficits for silver and platinum in 2021.

According to Bloomberg Intelligence commodity strategist Mike McGlone, silver will head towards a new record high on improving principles and collecting technical strength.

Silver investors must anticipate some volatility and maybe some surprises on the way to an eventual brand-new high in dollar terms above $50 per troy ounce. It might take place next year. It might take a bit longer.

Having a long-lasting horizon is important to be able to participate in the full magnitude of a precious metals bull market.

A brand-new nominal high in silver will just be the very first major turning point in a booming market that might increase several times from here prior to being overvalued in genuine terms.



Is Platinum A Good Investment?

Is platinum a good investment

Is platinum a good investment? What do the experts think? All experts agree, that under the right circumstances, platinum could be a good investment. Platinum has a much shorter history in the financial sector than gold and silver, as it was unknown to ancient civilizations.  Experts agree that platinum is 15-20 times scarcer than gold on the basis of annual production. Because of this fact, platinum has usually tended to sell at a significant price premium to gold.

Is Platinum a Good Investment

Platinum is a precious metal commodity with bullion coins, bars, or ingots, available to all investors. The price of platinum is volatile, more than that of gold therefore, investing in platinum should be approached with caution. In 2008 platinum lost 2/3 of its value, when it dropped from $2,252 to $774 per oz. In comparison, the price of gold dropped from $1,000 to $700 during the same time, a loss of only 1/3 of it value.

Is platinum a good investment

During periods of sustained economic stability and growth, the price of platinum tends to be much higher than the price of gold, sometimes twice as much. On the other side during periods of financial and political turmoil, the price of the metal tends to decrease, due to reduced industrial demand, falling below the price of gold.

Right now, platinum sells at $959 and gold at $1,266. As we see, the price of platinum is much lower than the price of gold itself. Nine years ago platinum was selling at $2,252, compared to that the metal is undervalued.

Global Platinum Shortage

If we take into account, the reduction in capital expenditure on platinum mining projects, in South Africa since 2012 and thus, reductions in platinum production are expected to follow.  To top that, a number of platinum mines have closed, while demand remains strong.

There is only one problem, and that is gold. If gold becomes bullish, then chances are platinum prices might drop, unless the demand for the metal remains strong and the supply weak as it is now.

Platinum is a Scarce Metal

Nevertheless, platinum is a scarce metal, a metal that costs more than gold to produce, and it has been trading lower than gold for a few years now. Apart from that, it is a volatile precious metal, and investing in it should go ahead after a careful examination of the precious metal market and the economy as well.

I hope my post is platinum a good investment has been helpful to you. If you still have any questions feel free to let me know in the comment section.