The Future of the Precious Metal Market

With the beginning of a new year comes new speculation about the gold, silver, palladium and platinum markets. The coming fiscal cliff, mining strikes in South Africa, the exponential growth of the Asian market and fluctuating demand in the industrial sector will have great impact on the future of precious metal investment portfolios in the near and distant future. Investors looking to put their investments in the right places do well to pay attention to the global market.

Gold investing has consistently been a smart investment decision and 2013 will be no different. However, gold has seen some of the largest fluctuation in price in response to public worry about the possible impact of the proposed fiscal cliff.

Consequently, certain analysts like HSBC Holdings Plc have been more conservative about their prediction for the future price per ounce of gold. The year-end price of gold set by the major bullion bank HSBC Holdings Plc was $1,675 per ounce of gold.

Predictions for 2013 climb slightly at $1,670 per ounce. This prediction is slightly lower than the estimate of $1,760 made in the beginning of 2012. However, while gold did not rise in price as much as predicted, the prognosis is still good.

HSBC is not as optimistic about the long-term future of gold. While HSBC predicts that the per-ounce price of gold will rise slightly to $1,775 per ounce, they predict a slight drop in gold prices to $1,675 per ounce in 2015.

What does that mean for those in the market for gold? Now is a good time to set gold portfolios up for long-term investment. The market is steady and conservative and gold prices are as low as they will be in the near future.

However for those looking to make the best return on their investment, acting now is better than acting later. Analysts predict that gold prices will rise higher than predictions during the course of 2013 as the United States government settles on its fiscal future.

Investors who place heavy portfolio investments in gold should hold on. As the economy continues to pull itself up by its bootstraps, the price of gold will follow suit. Those that buy and invest in gold now will see respectable returns down the line.

Silver prices were at an all-time high in 2011. The price of silver weakened slightly in 2012, but analysts predict that silver prices will continue to behave bullishly in 2013 and beyond. If you are planning to add silver to your investment portfolio, now is the time to do it.

In December 2012, world-renowned Thompson Reuters GFMS released its predictions for silver prices in 2013. In their estimation, the market will be very good for silver — especially those who have already invested and those who invest as soon as possible.

As 2013 unfolds, silver is predicted to gain as much as 38% in value by the year’s end. The impressive gains in the silver market have a lot to do with global shorts. Back in 2012, most of the demand for silver — over 40 percent — came from the industrial sector. Only 30 percent came from precious metal investors. Roughly 20 percent came from jewelry and silverware.

But those ratios are predicted to change in a big way in 2013. Analysts predict that the manufacturing and industrial sector will increase even further. These demands will bring shorts in the market that will drive the price of silver up in a big way.

The manufacturing industry isn’t the only sector providing pressure on the silver market. Low interest rates that continue to creep downwards will soon drive demand up with precious metal investors. Furthermore, rapidly industrializing cities in areas like China are demanding more silver for jewelry and other decor items in a big way.

These factors have created something of a perfect storm in the silver market and a considerable amount of excitement for the future of silver in 2013. Philip Klapwijk, the head of precious metal analysis for Thomson Reuters GFMS, released the following prediction: “a rebound in investment demand stemming from continuing loose monetary policies is expected to drive silver prices towards and possibly over $50 during 2013.”

In fact, many analysts predict that silver will outperform even gold in the coming year. Those who held on to their silver through the 2011 low point will find themselves in a great position.

Investors who have not yet added silver to their portfolio would do well to do so now. Silver is scheduled to rise, but the increase will be incremental as the strain of the market shortage is felt. Those who invest in silver now will see big returns on their investments by year’s end.

Platinum investors and market watchers saw the abundance of platinum supplies in 2011 and 2012 sink the price of platinum.

However, in 2013, the price of platinum is expected to make significant gains thanks to significant changes on the supply side of platinum. While platinum flooded the market in 2011, the flood was not due to an increase in mining rates. The glut had much more to do with large-scale release of existing supplies by refineries.

The actual supply of platinum mined in 2011 dropped by 3 percent, which is a significant decline. Market analysts and those on the ground near South African platinum mines expect the output from the mines to continue to fall. This steady decrease will reduce the world’s supply of platinum.

However, the story of platinum’s performance in 2013 does not end there. Johnson Matthey’s latest platinum market review suggests that while supply of platinum will shrink in 2013 as it did in 2012, so will industrial demand for platinum on a global scale. This trend will follow the 2012 pattern, which say European industrial demand for platinum, which fell by 280Koz in Europe by September of 2012.

These two influences on the platinum market make the coming months the best time to buy platinum. As supply and industrial demand continue to decrease, the price of platinum will continue to fall. For investors with room in their portfolios, now is a great time to get their hands on this precious metal.

Palladium is in high demand as it has been. However, uncertainty in the future of the global palladium supply means considerable speculation in the future of the palladium market in 2013 and beyond.

South African palladium suffers from the same mining difficulties as South African platinum. Russian sources are also predicted to slow in the future.

While global supplies of palladium decrease, global demand in the auto catalyst sector is expected to increase in North America and Europe. And even though Japan’s auto catalyst sector is expected to slip backwards now that the post-disaster demand has waned, the global picture for palladium demand is still very good.

Predictions are similarly positive for palladium demand in other sectors of the market. As the middle class and industrial sectors of China and other Asian countries continue to grow, so will the demand for palladium in chemical manufacturing for commercial products.

Demand across most facets of the industrial palladium demand combined with slow production will push the price of palladium up over the next several months. Precious metal investors who have already taken advantage of palladium’s low prices will find the coming months and years a great opportunity to enjoy a return on their investments.

However, while the near future of palladium demand commands higher prices, the long-term future of palladium markets may be softer than the near future. In some sectors, palladium is facing significant competition from cheaper alternatives in electrical components and dental apparatus.

Those interested in investing in palladium would be wise to do so now. After a quick turn around on investment, palladium prices are expected to slip. Unless there are new long-term surprises in the palladium market, now is the time for investors to put their money in and get out before the market softens considerably.

2013 promises to be a good year to invest in precious metals. Those looking to buy gold and platinum put themselves in a position to make solid investments that will pay in the long term. Palladium and silver are in a position to produce quicker returns on investment for those willing to invest now and wait out the year.

Investors looking for the right place to take advantage of bullish and bearish precious metal markets will do well to work through a reputable coin and bullion trading site like has been trading gold, silver, bullion, platinum, palladium, coins and other precious metals for 40 years. For investors armed with the right information and the right portfolio, there are many investment opportunities to be had.




The Future of the Precious Metal Market
3 (60%) 2 votes