The first quarter of 2021 is already bringing plenty of volatility to the precious metal market. Gold has come off its high of $2,070/oz in January back to $1,808 following a consistent downward trend in the last 60 days. On the other hand, Silver has been relatively consistent in its pricing never straying far from the $27/oz price tag, slowly increasing with time. Currently, Silver sits at $27.80. One metal that has made incredible rallies is Rhodium. The precious metal has been reaching new highs daily and is currently priced at an all-time high of $24,300/oz. Platinum, a main ingredient in autocatalysts, has slightly dipped from its all-time high of $1,311 in mid-February but now remains consistent at $1,271. Palladium, the other main ingredient in autocatalysts continues to be relatively volatile and has recently recovered from a low of $2,208/oz at the end of January to $2,337.
Following the surge in demand of Gold at the height of the COVID-19 pandemic, which caused many uncertainties, the gold/silver ratio, a traditional indicator of market risk, has been on a consistent downtrend in the last 6 months largely due to rapid rollout of the COVID vaccine and is now at its lowest since August 2014. The ratio currently stands at 65.54 to 1 clearly showing that the white metal is outperforming its yellow counterpart. This dropping ratio is indicating that consumer confidence in the market is increasing, consequently leading to a drop in demand for Gold.
Similarly to the Mint Ratio, the Gold/Platinum ratio has also tremendously dropped from 2.2:1 in November 2020 to 1.4:1 now. In February alone, the ratio has decreased by 15.47%. Many believe the increase in consumer confidence is not only dropping the demand of gold but also increasing the production demand of important manufacturing metals like Palladium, Platinum and Silver.
The continued interest and rapid industry growth of electric vehicles has largely been responsible for the tremendous bull run made by Rhodium. According to a Citi group report, the cost of precious metals to EV companies will cost the industry $48 billion this year compared to $18 billion in 2019. Over the last 2 months, Rhodium prices have increased an impressive 45.95% and 19.7% in February alone.
Factors heavily affecting consumer confidence right now have been much more positive rather than negative. The rate of vaccination in the US stands at around 1.5 million doses a day, well on track to beat Biden’s 100 million vaccines by his 100th day in office. The $1.9 trillion stimulus continues to gain positive backing, with most people confident that the market will recover. On the European side, Boris Johnson’s announcement of a possible full lifting of restrictive measures by June 21st is also boosting consumer confidence. Worldwide, life is inching towards a reopening and people are optimistic.
