The precious metal market has seen great rallies in 2020 and it seems that the bullish run will deluge into 2021. Continuing its 5-year uptrend and its best year since 2010, Gold gained more than 25%. Palladium following closely behind finishing the year up 26%, Platinum 11% and Rhodium running a huge 107% increase.
Silver continues to dance with the $26 resistance price as investors are bullish on its future thanks to leaps in renewable energy. The election of Joe Biden sees climate change becoming one of the administration’s top priorities heavily favouring silver amongst many other metals.
Silver is a critical component of photovoltaic cells found in solar panels and the rapid transition towards renewable sources is propelling demand for silver to new highs every year. According to CRU Consulting, in the next 10 years, producers are expected to consume an immense 888 million ounces of silver. Furthermore, Silver remains an ever so important component in the Internet of Things and semiconductor chips amongst other devices. As 5G spectrum auctions start to roll out around the world, the use of semiconductor chips is expected to double in volume hence pushing the demand for the metal even more.
Following the positive trend towards a greener, more sustainable planet. Governments have imposed strict standards on car manufacturers in order to reduce greenhouse gas emissions. Palladium, called “this year’s hottest metal” by Bloomberg is essential for the control of pollution in gasoline engines. This rapid growth of 97.3% from $1234.40 at the start of 2019 to $2453.80 at the start of 2021 might be short lived with the expeditious arrival of electric cars, which uses primarily gold and silver, both recyclable metals.
The announcement of a $1.9 trillion stimulus by Joe Biden along with a forecast of full employment (3-5% unemployment) by 2022 has risen fears of inflation in the coming years. The everlasting positive relationship between inflation and gold continues as more people turn to the yellow metal for protection. As COVID-19 continues to bring uncertainties and insecurities in the months ahead – gold will likely see a continued rise.
A challenge that opposes gold is the surge of interest and cash that has flowed into Bitcoin (BTC) as of late. The cryptocurrency, backed by Tesla & its CEO Elon Musk, carries a $647 billion market cap – a mere 5.88% of Gold’s $11 trillion market cap. Many believe Bitcoin is far too volatile and risky to be a safe long-term investment. Whilst volatile, the two share similarities that are not dismissible. Both are viewed a scarce resource and the effect of cash inflation impuissant to their values. While scarce, Gold is a physical asset that can be mined up to a certain extent. However, introduced in 2009, there can only be 21 million of the digital gold, Bitcoin, mined.
Only time will tell if other Blue-Chip companies like Apple and Google have plans to start accepting
Bitcoin as a payment option like Tesla has announced they will.
