Kitco News launched its 2021 Outlook, which offers the most comprehensive coverage of the precious metals markets in the new year. Trillions of dollars were injected into the financial markets in 2020 and this will not come without consequences. Economists expect investors to be preparing for inflation in 2021.
(Kitco News) – Investment demand for gold and silver skyrocketed across all cylinders in 2020, as U.S. Mint data shows that demand for gold and silver has reached its highest level in four years.
According to its latest sales figures, the US Mint sold 884,000 ounces of gold in various denominations of its American Eagle gold coins. The physical demand for gold has increased more than five times, an increase of 455% compared to 152,000 ounces sold in 2019.
Gold coin sales reached their highest level since 2016, when the Mint sold nearly 2 million ounces of gold that year.
Looking at the silver market, the US Mint saw its silver sales more than double compared to last year. According to the figures, the United States Mint sold 30.01 million ounces of silver, an increase of 101% over 2019.
Not only has demand for sales of gold and coins reached a maximum of four years, but mints around the world have struggled to deliver their products, as supply chains have been significantly disrupted due to global blocking measures enacted by governments to try to slow the spread of the deadly virus.
According to the US Mint, the busiest month was March. It sold 151,500 ounces while the world economy was devastated by the COVID-19 pandemic. According to analysts, investors have rushed to precious metals as a safe-haven asset, as stock markets saw unprecedented selling pressure in March.
Peter Hug, director of global trade at Kitco Metals, said he was not surprised that investors plunged into gold and silver in March. He added that premiums for gold and silver coins reflected increased demand, as supply fell dramatically. He noted that, with silver trading at around $ 12 an ounce, American Silver Eagles premiums reached $ 12 an ounce.
“There was a lot of fear out there and some investors thought that the best way to protect themselves was with physical metal,” he said.
Hug added that improving investor sentiment helped push gold and silver premiums back to pre-COVID-19 levels.
The second largest month of gold coin sales came in August, which was another historic period for the precious metal. Investors bought physical gold as prices hit new records above $ 2,000 an ounce.
The United States Mint said it sold 121,000 ounces of gold in August.
Looking to the future, Hug said he expects demand for gold and currencies to remain strong until 2021.
He added that gold may be sensitive to strong corrections in the stock markets, as investors sell their precious metals to increase liquidity. However, despite any short-term sales, the macro picture looks strong in 2021.
Not only will demand for gold and silver coins benefit from new stimulus measures, but in the second half of the year, precious metals will be driven by inflationary pressures.
“I think that another stimulus agreement is needed to put us on the bridge and where the economy starts to normalize,” said Hug. “As soon as the economy starts to normalize, the amount of pent-up demand will be so great that you will have to argue that inflation will increase significantly. Central banks will be behind the inflation curve and that will be good for gold and silver. “
Hug is not alone in his bullish gold and silver outlook. Many analysts expect gold prices to rise well above their historic highs. Some banks are asking for prices averaging $ 2,300 an ounce this year.
Silver is also expected to outperform gold, with many analysts saying they are looking for prices well above $ 30 an ounce. Some analysts believe that silver has surpassed its all-time highs, above $ 50 an ounce.
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