EDITOR NOTE: Gold may be the monetary metal par excellence, but one characteristic that makes both silver and platinum secondary to yellow metal also makes them beneficiaries of booms and busts. We’re talking about industrial usage and demand. While investors can seek safety in silver and platinum during times of economic uncertainty, they can also seek growth investing in both once the economic engines of industrial production pick up. Strategists at UBS Wealth Management say that silver and platinum will outperform gold this year. 2020 was clearly gold’s year. But to be fair, despite gold reaching amid the pandemic, silver’s 46% rise still outperformed gold’s 24% by year’s end. Platinum trailed behind both at 13%. The S&P 500, 15.7%, Silver was the big winner and it still has plenty of room to run.
2020 was one of the best years on record for gold, as investors piled into the safe-haven asset amid geopolitical and economic uncertainty. The precious metal even hit a record high of $2,075 on August 7, 202.
But UBS Global Wealth Management strategists don't see gold repeating its stellar performance in 2021. Instead, the firm sees other metals- including silver and platinum - outperforming gold during the year ahead.
As the economy improves in 2021, industrial demand will support silver and platinum group metal prices, said UBS. The strategists expect silver prices to reach $30 per ounce by the end of the first quarter and eventually level off to $27 per ounce by the end of 2021. Silver is currently trading around $25 per ounce.
Platinum will rise to USD 1,250/oz by the end of 2021, a 16% upside from Tuesday's price, UBS forecasted. The firm also said palladium could also hit $2,900 per ounce in 2021, roughly 21% above current levels.
A greater focus from policymakers on renewable energy and decarbonization in 2021 may also help silver. According to UBS, more than 50% of silver used in industrial applications is linked to solar panels and electronics.
Meanwhile, gold will struggle to attract sufficient ETF inflows to sustain prices north of $1,900, said UBS. The firm sees the asset finishing the year 2.5% lower than current levels, at $1,800 per ounce.
UBS added that ongoing dollar weakness and low real interest rates will keep all precious metals prices elevated in the first quarter of 2021. However, gold will then weaken in the second quarter as the macroeconomic backdrop improves and the Federal Reserve signals it will gradually taper its bond-buying pace.
"We advise investors with an elevated risk appetite to be long platinum and palladium. We also like precious metals for yield pick-up opportunities," the analysts wrote.
Originally posted on Markets Insider