Analyzing pricing patterns is an important part of preparing to invest in precious metals. The precious metals outlook is optimistic for the short-term future, although prices may fluctuate for each material.
For each precious metal (gold, silver, platinum, and palladium), assessing demand is important for determining the precious metals outlook. Shifts in demand from different sources can lead to major changes in price, and being able to predict such changes is very helpful in making profitable investments. Supply plays a significant role, as well, although more so for platinum, palladium, and silver than for gold.
Prices for gold appear slightly positive, although investors are still monitoring economic policy decisions around the world, as these can have a big impact on precious metals outlook over time. For gold, the decisions of the United States and the Eurozone are important, as decisions for austerity or inflationary measures can have a direct impact on the price of gold. If, for example, the U.S. opts for a monetary policy that encourages inflation in combating debt issues, the price for gold will likely rise. For 2013, most experts project a slight increase in gold prices, and prices appear positive (but less certain) for 2014. This year, investors expect gold to cost about $1775 per ounce, on average, with the price increasing very slightly the next year.
Pricing for silver typically fluctuates more than gold prices, but for the near future, silver appears to be fairly steady. Investor demand will play a large role in how the price of silver changes, as industrial demand is expected to decrease while supply continues at a high level. Investors may, however, eliminate this surplus if the precious metals outlook is strong enough overall, as such investments can be effective for balancing one’s portfolio in periods of inflation. Silver prices are expected to lie somewhere around $34 per ounce in 2013 and increase slightly to $37.50 for 2014.
The platinum market continues to depend on South African mining production. Recent history shows that as supply lines are strained due to political or infrastructural issues in South Africa, the supply of platinum is threatened and prices increase. In addition, auto industry performance is closely tied with platinum prices: The better each auto market performs, the more demand there is for platinum, leading to increased prices. In 2013, European auto market struggles may drag the price down, but supply problems in South Africa will push them back up. Prices are expected to be around $1700 for 2013 and $1800 for 2014.
Palladium prices depend on both supply and demand, similar to platinum prices, except that the supply source is concentrated in Russia. While the Russian government keeps its palladium stock a secret, most investors believe the stockpile to be shrinking based on Russian export figures. That, coupled with increased demand from the North American and Chinese auto markets, lead palladium to be quite strong in terms of the precious metals outlook. Prices for 2013 are expected to be around $745, with the price increasing to $820 in 2014.