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Silver and Platinum Set to Outperform Gold in 2021

Author: Jon Clarke - Bullion & Economics Editor

Published: 19 Jan 2021

Last Updated: 1 Feb 2021

Synopsis

The outlook for silver and platinum looks promising over the next 12 months as a number of precious metal analysts say they both look set to outshine gold. 

credit: Pexels from pixabay

Background

With COVID vaccine rollouts ongoing, increased hopes of an end to restrictive lockdowns offer some glimmer of hope of an economic recovery. On the other hand, threats of a possible dollar crisis continue as the soon-to-be inaugurated US president Biden unveiled a further $1.4 trillion in stimulus.

While Biden’s announcement led to a gold retreat as bond yields rose, inflation fears help to quell any further dips in the gold price.

A number of analysts have high hopes for precious metals although gold may not be 2021’s top performer.

Silver

Silver became of the best performing metals in 2020 peaking at £22.72 per troy oz. in August from a low of £9.87 in March. Metals daily CEO Ross Norman is predicting that the bull run for silver will continue through 2021 and the gold-silver ratio will decline as silver outpaces gold. There is however some pullback in demand due to the stagnant automotive industry and the photovoltaic sector.

UBS Global Wealth Management strategists are also optimistic on the silver rally, pointing out that over 50% of industrial silver is used in solar panels and electronics. This could eventually lead to silver peaking at $30/£24.33 in the first quarter leveling off to $27/£19.52 by the end of the year.

Norman’s assessment is more bullish with a peak of $36/£26 and an average for the year of $30.

Platinum

Platinum demand began declining in 2014 following the Volkswagen diesel emissions scandal. Platinum is primarily used for catalysts which make up around 50% of total demand. The scandal led many producers to switch from diesel cars, which use platinum catalysts; to petrol engines which use the more expensive palladium catalysts.

Norman points to a probable recovery in car sales once COVID is under control. Also, the increasing awareness of platinum’s role in the hydrogen industry is likely give it a much-needed push, particularly as interest grows for fuel cell electric vehicles (FCEV). An expected supply deficit will likely lead to demand outpacing supply by around 240,000 ounces.

UBS are again, not as bullish as Norman, predicting a 2021 high of $1250/£905. Norman is predicting a peak of $1520/1102 and a yearly average of $1316/£954.

What’s Next for Gold?

There is little doubt that gold will still remain its position as an inflation hedge, but some believe that a return to a normal economy would act as a better springboard for silver and platinum prices due to its industrial uses. With financial markets still uncertain and large swathes of government stimuli likely to cause further issues, gold will still be considered the safe haven it has been in so many other crises.

Gold is predicted to see a return to its August peak and hit new highs of up to $2285/£1659, so although it’s not likely to seem the same returns as silver and platinum, it’s still looks to be a beneficial asset for 2021.

VAT on Silver and Platinum

Unfortunately, unlike gold, VAT is applied on new platinum and silver which means an extra 20% to the cost of investment. There are ways to avoid this however, either by storing it overseas or by purchasing secondary market products which fall under the Special Scheme. You can learn more about Vaulted Storage and the Special Scheme by clicking the links

Further Reading

Click the link to read more about the Special Scheme, click the link.

You can learn more about our Vaulted Storage service here.

You can also see our range of silver and platinum products.

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