Precious Metal Trading – What do You Need to Know in 2021?

There’s no doubt that precious metals endured a volatile 2020 and a similarly wild start to this year, with both gold and silver having experienced significant fluctuations over the course of the last 15 months.

The value of gold appreciated by 28% during 2020, for example, while silver nearly broke through the $30 mark recently amid sudden interest from an infamous trading community on the social site Reddit.

There’s no doubt that these price movements have been largely inspired by wider economic fluctuations and the impact of the coronavirus. But how are the metals faring now, and what should we expect through 2021?

How are Gold and Silver Faring Now?

Last year saw gold enjoy its best year since 2010, while 2020 also saw the fifth straight year of positive gains for the yellow metal. The metal also achieved a marked high of $1,941.85 on January 3rd of this year, while it continued to trade above $1,800 until the last week in February.

Interestingly, it has since dipped to $1,724.47 on March 11th, thanks largely to the global vaccine rollout, improved sentiment and an upgraded IMF growth forecast that anticipates global expansion of 5.5% through 2021.

This reflects gold’s status as a viable safe haven asset and a secure store of wealth, as it tends to appreciate during times of austerity and depreciates as the global economy grows and investors’ appetite for risk increases.

Interestingly, silver enjoyed similar growth in 2020, as this is also a tangible source of wealth and one that’s innately cheaper than gold.

The asset peaked at $28.29 per ounce on August 6th of last year, before once again scaling the heights $28.52 at the end of January 2021. This was partially driven by the rush to market precipitated by the aforementioned Reddit trading group, although the price of silver has since declined and recently closed at $26.15 on March 11th. 

Silver was also the best-performing precious metal last year, rising by nearly 48% and outperforming all of its rivals.

What Next in 2021?

Ultimately, both assets could offer potential growth options in 2021, with gold having appreciated in seven of the last 10 years and silver also looking to build on a hugely impressive 2020.

However, there’s no doubt that the demand for gold and its subsequent value is more likely to depreciate slightly this year, with investors expected to adopt a more risk-hungry approach as global lockdown measures are removed and economic growth returns.

The same may not be true for silver, however, which also has value as an industrial asset and one that tends to appreciate during times of economic and global manufacturing growth. This precious metal is also set to become a major beneficiary of emerging industrial applications this year, especially in the forms of solar and renewable energy. 

Make no mistake; clean technologies of this type are known to favour silver, so the rapid transition away from fossil fuels could boost investors in the coming months.

Of course, silver is also widely used in products such as batteries and medical devices, which reflect industries that are also poised for widespread growth in the near-term.

As a result, silver arguably offers greater and more tangible value than gold in 2021, with this trend likely to be reinforced by sustained economic growth.