As part of its 2021 Outlook feature, Kitco surveyed a total of 1,015 analysts and investors regarding their outlook for precious metals heading into the new year. While the participants were bullish on commodities across the board, silver emerged as the standout forecast as has been the case for much of the previous year.
Why silver looks bright in 2021
56% of the participants, or 568 Main Street investors, named silver as their top metals investment and said that they expect it to outperform gold. Both gold and silver have done exceptionally well over the past 12 months, but certain nuances to the silver market have caused some forecasters to call for a price of as high as $50, up from current levels of around $24. A major part of this bullish sentiment has to do with an economic recovery and an overall push towards green infrastructure, one that was already prominent in Europe and Asia but should now gain traction in the U.S. as well.
The reinvigorated manufacturing sector, boosted by trillions of dollars of monetary stimulus, should help spur a bid for silver that could strain supply as the metal’s production is more complex than that of gold. Besides demand for silver in hydrogen power cells and other green technologies, silver’s investment component will also keep the metal on the same track that has seen prices more than double from their March lows, said the participants. The aforementioned stimulus has made inflationary expectations as high as they have been in recent memory, and few market watchers aren’t bracing for a significant rise in inflation over the next few years.
The many reasons gold will continue to shine
The same inflationary concerns should likewise help gold reclaim the $2,000 level sometime next year, up from its current level of around $1,900. Over the past year, there have been plenty of big banks and top names in finance who predicted that 2021 would see gold posting a new all-time high, above the current one of $2,070 set in August.
Besides inflationary concerns, a persistent low interest rate environment should also remain a major driver of gold prices. Interest rate slices started pushing gold prices up in the summer of 2019, and the surveyed participants expect low or negative interest rates around the globe to stick around until at least 2023. The dire straits that the sovereign bond market has found itself in has caused portfolio managers to reassess their stance, with many now beginning to view gold as a better alternative to hedge against stocks. While silver took the center stage of the survey, 10% of participants, or 140, nonetheless stated they expect gold to be the best performing asset this year.
Promising prospects for platinum and palladium
As for other precious metals, participants in the survey said they see platinum outperforming palladium by a slight margin in 2021, despite the latter’s shrinking supply and recent climb to all-time highs. Like silver, platinum has a strong industrial component and its price ties heavily into economic strength.