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At the moment, platinum and palladium are the most attractive precious metals to invest in. This is what analyst Georgette Boele of ABN Amro writes in a New update. She expects the global economy to pick up this year, increasing demand for platinum and palladium. These precious metals have many industrial applications and will therefore benefit more, according to Boele.
According to ABN Amro, the increase in U.S. Interest T and an expected recovery of the US dollar will put further pressure on the gold price in the near future. Gold traditionally has a negative correlation with the dollar, which means that the price usually rises when the value of the dollar falls. The precious metal is also reacting strongly to the development of the 10-year yield in the United States.
At the beginning of August, the decline in US 10-year yields turned into an increase. At that very moment, the Gold price at record highs. Due to rising interest rates, the outlook for gold and silver is currently less favourable, according to Boele, although she expects silver to perform better due to the many industrial applications. About half of the global demand for this precious metal is accounted for by industry. Gold, on the other hand, is primarily a monetary metal, which reacts more to interest rates and inflation.
Boele expects a decrease in the Gold price based on rising interest rates in the United States. From a historical point of view, this sounds plausible, but at the same time we see that interest rates in Europe are still extremely low. Because the savings rate is close to zero, we expect more savers to turn to alternatives such as gold and silver. This trend has become increasingly strong in recent years.
ABN Amro is positive on platinum and palladium, less so on gold and silver (Source: ABN Amro)
The outlook for platinum and palladium are much more beneficial, according to Boele. These precious metals are widely used in industry and are less sensitive to changes in interest rates and monetary policy of central banks. In her latest update, Boele mentions several reasons why platinum is likely to outperform the other precious metals.
The first reason is the recovery of the Chinese economy, which will increase the demand for platinum jewelry. China is the largest market for platinum jewelry in the world. Secondly, Boele foresees more industrial demand for platinum, especially from the automotive industry. More demand for cars means that more platinum and palladium are needed for catalytic converters that reduce harmful gas emissions. A positive side effect for platinum is that car manufacturers use this precious metal for hydrogen cars.
According to Boele, platinum currently has the best papers, because it is relatively cheap compared to the other precious metals. The graph below from Boele's previous update shows that platinum has not been this low against both palladium and gold in the past twenty years. The platinum price has also lagged behind silver.
Platinum is relatively cheap compared to gold and palladium (Source: ABN Amro)
This contribution was made from Geotrendlines
