EDITOR NOTE: It’s that time of year where investors are doing what they typically do: bargain hunt. 2021 brings a unique context to everything, from inflation expectations to prolonged economic uncertainties. There isn’t much of a choice here in terms of portfolio growth and protection. Gold and silver will play an important part with regard to both. And of the two metals, the grey metal is certainly shining brighter as the more undervalued. 2021 may be silver’s year, not only retesting its $50 highs possibly but outperforming gold’s bull run. Whichever way you decide to go, both metals will certainly prove themselves as undervalued monetary assets in light of the high costs of inflation to come.
The silver market is garnering a lot of attention heading into 2021 and according to Main Street retail investors, it is the precious metal they will be keeping an eye on in the new year.
Investors have been waiting a long time for silver to finally live up to its reputation and outperform gold. For the fifth consecutive year, retail investors see the grey metal as the top asset in the precious metals sector.
This year, 1,015 people participated in Kitco News’ Outlook 2021 online survey. A total of 568 Main Street voters, or 56%, said they expect silver to fare better than other metals in the year ahead.
The bullish outlook for silver come as the precious metal has seen a historic rally since falling to $12 an ounce due to financial market turmoil due to the COVID-19 pandemic. Since its lows, silver prices have rallied more 115%.
In comparison, gold prices are up 25% from its March lows around $1,500 an ounce.
Many analysts also see silver outperforming gold prices in 2021. Low interest rates, a weaker U.S. dollar and rising inflation pressures will drive both gold and silver, which are both seen as monetary metals. However, improving economic activity next year will add another pillar of support for silver.
Some analysts see potential for silver prices to retest their all-time highs above $50 an ounce. However, most forecasts call for a more temperate rally with many seeing prices push above $30 an ounce.
Among financial institutions, Canadian Bank CIBC could be the most bullish on silver as they see prices averaging next year around $32 an ounce.
"Even though the commodity has already performed well year-to-date, this metal has the potential to provide investors with even more torque given the relatively smaller market for silver versus gold," said Anita Soni, author of CIBC's precious metals outlook.
In a surprise twist, investors see copper as the second-best performing asset for 2021. According to the survey, 161 voters or 16% saw the red metal outperforming next year.
Copper’s outlook comes as prices continue to hold near their highest level in eight years. Analysts note that copper is benefiting from significant supply and demand imbalances. As the global economy starts to recovery from the COVID-19 pandemic, many analysts expect copper demand to grow while supply is expected to shrink.
“The Covid-19 pandemic has had a pronounced impact on the metals, as an initial collapse in demand was accompanied by protracted supply disruptions, a combination that ultimately provided for strong fundamentals, which we believe will carry over into 2021,” said Michael Widmer, commodity analyst at Bank of America Securities. “We expect a global copper market deficit in 2021. This suggests that already low inventories may decline further, so prices are set to remain elevated.”
Gold prices came in third place with 140 participants or 14% expecting the yellow metal to be the best performing asset in 2021.
Sentiment in the gold market is extremely bullish with many analysts expecting prices to retest August’s all-time highs above $2,000 an ounce. Gold is expected to perform well as interest rate are expected to remain low through 2023. At the same time, inflation is expected to pick up as the economic recovery picks up.
Platinum came in fourth place with 109 voters or 10% saying they were bullish on the precious metal. In last place with 37 votes or 4% was palladium.
Although palladium market continues to see shrinking supply; however, analysts are slightly more bullish on platinum as demand starts to pick up.
According to analysts, growing expectations surrounding the green economy and the use of hydrogen power cells is generating a compelling investment story.
Originally posted by Kitco