Kitco News has launched its 2021 outlook, offering the most comprehensive coverage of precious metals markets in the new year. Trillions of dollars were pumped into financial markets in 2020 and it will not come without consequences. Economists expect investors to steel for inflation in 2021.
(Kitco News) – Investment demand for gold and silver peaked on all cylinders in 2020, as US Mint data showed that demand for gold and silver coin reached its highest level in four years.
According to the latest sales figures, the US coin sold 884,000 ounces of gold in various denominations of its US Eagle gold coins. The physical gold demand has more than quintupled, 455% higher than 152,000 ounces sold in 2019.
Gold coin sales reached their highest level since 2016, when the coin sold nearly 2 million ounces of gold that year.
If we look at the silver market, the US currency has more than doubled its silver sales compared to last year. According to the numbers, the US currency sold 30.01 million ounces of silver, which increased by 101% compared to 2019.
Not only has the demand for gold and coin sales peaked at four years, but coins around the world have struggled to deliver their products as supply chains have been significantly disrupted due to global closure measures put in place by governments to spread trying to slow down the deadly virus. .
According to the US currency, the busiest month was March. It sold 151,500 ounces as the world economy was devastated by the COVID-19 pandemic. According to analysts, investors were chasing precious metals as a safe haven as stock markets had unprecedented selling pressure in March.
Peter Hug, global trading director at Kitco Metals, said he was not surprised that investors jumped gold and silver in March. He added that premiums for gold and silver coins reflected the increase in demand as supply fell sharply. He noted that premiums for American Silver Eagles with silver trading increased from about $ 12 per ounce to $ 12 per ounce.
“There was a lot of fear out there and some investors thought the best way to protect themselves was with physical metal,” he said.
Hug added that improving investor sentiment has helped bring gold and silver premiums back down to around the level of COVID-19.
The second largest month for the sale of gold coins took place in August, which was another historic period for the precious metal. Investors bought physical gold as prices rose to new record highs of more than $ 2,000 per ounce.
The U.S. currency sold 121,000 ounces of gold in August.
Looking ahead, Hug said it expects demand for gold and coins to remain strong until 2021.
He added that gold could be sensitive to sharp corrections in stock markets as investors sell their precious metals to increase liquidity. Despite any short-term sales, however, the macro picture looks strong in 2021.
Not only will the demand for gold and silver coins benefit from further stimulus measures, but in the second half of the year, the precious metals will have to be driven by inflationary pressures.
“I think another stimulus agreement is needed to get us across the bridge and where the economy is starting to normalize,” Hug said. ‘Once the economy starts to normalize, the amount of pent-up demand will be so great that you have to make the case that inflation will increase significantly. Central banks will sit behind the inflation curve and it will be good for gold and silver. ”
Hug is not alone in its positive outlook for gold and silver. Many analysts expect gold prices to rise above their all-time highs. Some banks are asking that prices average $ 2,300 per ounce this year.
Silver is also expected to outperform gold, with many analysts saying they want to lower prices to more than $ 30 per ounce. A few analysts see silver past its overall highs above $ 50 per ounce.
Disclaimer: The views expressed in this article are those of the author and may not reflect the views expressed Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, not Kitco Metals Inc. or the author cannot guarantee such accuracy. This article is for informational purposes only. It is not a request to trade in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article does not accept the blame for losses and / or damages arising from the use of this publication.