Gold may be making all the headlines but look at the other metals!
Author - Graham Couzens
Gold reaches a record high in December but it is the performance of silver and palladium that really catches the eye. What lies behind these record performances?
On Monday 6th December 2010 gold hit an all time high of $ 1430 per ozt fuelled by the general mistrust of the economies in the western world to get out of the recession and hence their ability to pay back the huge debts incurred. Investors are increasing turning to commodities to hedge their investments as the dollar and euro struggle to find support.
Silver has been making strong gains due to investment demand reaching a 30 year high of just over $30.00 per ozt whereas in September the price was just $19.00 per ozt. Part of this rise is explained again with investor interest and silver does represent for individuals a cheaper way of holding investments. Although there is some 15,000 mt of silver held in EFT’s the purchasing of silver coins has proved extremely popular. Demand for the American Eagle silver coin has hit record levels and mints in Canada and Australia have also seen good silver coin demand. It is anticipated this demand for coins will increase by 30-50% over the next year. Added to this the demand for silver jewellery has also risen to new highs especially in the UK, partly due to fashion but also due to the increased cost of purchasing gold jewellery items.
Platinum has rallied to hit its best price level for two years of $1,809.0 per ozt in November although it has fallen back since. It is Palladium however which has been the real star. At the beginning of the year it was $390 per ozt, now 12 months later, it is hovering around the $740 per ozt level. Although there is investor demand there are other reasons behind such a staggering rise. It is thought that the Russians have now sold most of their backlog of palladium stocks built up over many years so now supply and demand are back on a more even level. The increased demand however is coming in the usage in catalytic converters as cars sales in China and SE Asia continue to rise. With the US car numbers also showing good growth there is a belief that palladium could be in short supply and hence the rise in price.
Whatever the outlook, users of precious metals need to keep an eye on developments. It is likely that the short term outlook for all the metals is one of volatility with sharp rises and falls almost on a daily basis. To make sure you keep up to date don’t forget to view our latest prices page on our website.