Kitco News has launched its 2021 Outlook, which offers the most comprehensive coverage of the precious metals markets in 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) – Gold will play an important role as investors seek protection from ultra-relaxed monetary policy and fiscal stimulus in 2021, but some analysts expect the new year to be the time for the money to shine.
The silver market saw a dramatic rally in 2020, with prices more than doubling after falling to a multi-year low of around $ 12 an ounce in March. Many analysts see the current trend continuing as global monetary policies and industrial demand come together to bring the precious metal out of the shadow of gold.
While gold is expected to retest its historic 2020 highs, some extremely bullish estimates have crept into the silver market as well. While silver may have doubled in value from March lows, some analysts have said the feat can be achieved again in 2021.
“Uniquely valuable and increasingly industrial, the odds are tilting toward the metal – known as leveraged gold – following its yellow counterpart to new highs,” said Mike McGlone, senior commodities strategist at Bloomberg Intelligence, in a recent report.
While a return to $ 50 an ounce is not out of the realm of possibility, most analysts see a more nuanced rally for the precious metal, with many looking for prices to exceed $ 30.
Canadian CIBC Bank could be the most bullish on silver as it predicts prices will average around $ 32 an ounce next year.
“Even though the commodity has already performed well since the start of the year, this metal has the potential to provide investors with even more torque given the relatively smaller market for silver compared to gold,” said said Anita Soni, author of the CIBC Precious Metals Outlook.
Bank of America expects silver prices to surpass gold in 2021. The bank grabbed the headlines in November after lowering its forecast for gold to $ 3,000 at the end. next year. While the bank is neutral on gold, it remains overweighted on silver.
The bank said it expected silver next year to average around $ 29.13 an ounce with prices exceeding $ 31 an ounce.
Michael Widmer, the bank’s metals strategist, said in an outlook presentation last month that the outlook for silver remains bright as a new focus on green energy could increase demand for solar panels.
“Money is our favorite game on increasing investment in solar panels,” analysts said in their report.
Metals Focus analysts also predict that silver prices will well exceed $ 30 an ounce next year.
Industrial demand for precious metals remains a critical issue for 2021.
“The resumption of industrial silver applications is expected to outpace global GDP growth, with withdrawals in 2021 almost equivalent to 2019’s total. Support will emerge from a range of end uses, including photovoltaic and automotive demand.” said Neil Meader, director of gold. and the money, to the UK-based research company.
About half of the demand for silver, according to the analyst, comes from industrial uses, especially in solar power, as silver is a critical component of solar PV panels. Although the amount of silver in solar panels has decreased, the demand continues to grow.
In a report released in October for the Silver Institute, research firm CRU said it expects solar power production to almost double by 2025. The company said the solar industry is expected to use on average 81 million ounces of silver by 2030.
While industrial demand will play an important role in the silver market as the global economy begins to recover from the COVID-19 pandemic, some analysts note that investment demand will be significant.
Steve Dunn, head of exchange traded products at Aberdeen Standard Investments, said in a telephone interview with Kitco News that he expects the money to continue to attract investors because it is still relatively under- valued against gold.
“I think the high added value of money will be an important theme in 2021 for investors,” he said. “Silver has come a long way this year, but it still has room to catch up with gold.”
However, not all analysts are optimistic about silver next year. Harry Tchilinguirian, senior commodities economist at BNP Paribas, said in an interview with Kitco News at the end of November that he expected another rally for gold in the first quarter, then prices falling until the end of 2021. He added this because of their close correlation. , falling gold prices will also weigh on silver.
BNP Paribas is looking to average silver prices of around $ 23.50 an ounce next year.
Although Tchilinguirian sees gold and silver prices drop next year, he added that industrial demand for silver will help it generally outperform the yellow metal.
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