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December 2020 - Week 2 Edition

December 2020 - Week 2 Edition

Mainstream Banks See Gold Rising to $2,200 to $2,400 and Silver Reaching $30 to $40 in 2021

Gold gained $100 in the first week of December, rising from $1,762.55 on the final November 30 London price setting to $1,865 on Monday, December 7. In the same seven days, silver is up even faster, +11%, from $22.15 on November 30 to $24.60 on December 7. The U.S. Dollar index declined about 1% in the same week, but that doesn’t account for the nearly 6% rise in gold in that same time frame. The primary engine for rising gold and silver prices seems to be the fear of another major lockdown and the increased likelihood that another major stimulus (spending) bill will pass Congress this month.

With just three weeks left in this difficult year of 2020, it looks like both gold and silver will rise 20% or more, delivering their best annual performance since 2010, when gold rose 27% and silver rose 81%.

In December, it’s traditional to start looking at the year ahead, so we’re seeing some mainstream banks looking at the challenges ahead and predicting another 20% or larger rise in gold and silver in 2021.

Analysts at Citibank see gold rising to $2,200 in the short-term – on a three-month horizon – and then rising to $2,400 within six to 12 months. This marks an increase from their early July forecast of a 2021 high of $2,275, made shortly before gold ascended to its recent record high of $2,076.

A move to $2,200 within three months would be an 18% gain, and a rise to $2,400 is a gain of 28.7%.

Turning to silver, Barrons’ Commodities column quoted three analysts who predicted prices ranging from $30 to $40 in 2021. Those were brave predictions, considering that silver traded for $22 on November 30, when that issue went to press. If those predictions materialize, $30 to $40 silver represent 35% to 80% gains in 2021, based on November 30 prices, but a more realistic 22% to 62% gain from current prices.

There is a precedent for back-to-back silver gains of this magnitude: Silver gained 45.2% in 2009 (rising from $13.99 to $20.31, similar to this year’s gain).  It rose another 81% in 2010 to $36.75 per ounce.

Among the three analysts quoted by Barron’s, the lowest figure for silver comes from Goldman Sachs analyst Mikhail Sprogis, who focused on silver’s role in solar panels, which should expand greatly during the coming Biden Administration. Solar applications account for 18% of silver’s industrial demand and 10% of total silver demand, according to Sprogis, who set a $30 price target for silver in 2021.

CIBC (the Canadian Imperial Bank of Commerce) predicts silver will reach $32 in 2021, citing the Fed’s low interest rate policies and rising federal debt as “supportive of further significant price appreciation.”

Citigroup analysts maintain a $40 price target on silver over the next 12 months, due to investors seeking safety, an increase in industrial demand, particularly with the robust industrial and private demands by China. Citi also sees 12% growth in 2021 for silver demand in traditional consumer segments like silverware and jewelry.

America’s Gold Expert® Predicts $2,350 Gold and $32 Silver in 2021

As America’s Gold Expert®, I’m often accused of being a “cheerleader” for the precious metals and rare coins, but this year I’m actually a little more conservative than Citibank and some of the other mainstream banks.

For Gold, I’m predicting a slightly lower range than Citibank of somewhere between $2,200 and $2,350 but I don’t think gold can reach $2,200 within three months, like Citibank does.  I’m thinking it will take six months to reach $2,200 and a more likely peak price would be $2,350 in the second half of 2021.

Silver often acts like “gold on steroids” during a bull market move, so I think it can exceed $30 with a 30% gain to $32 per ounce based on rising industrial use in solar panels and rising investment demand.

When there is uncertainty about the future, like now, that is the time to increase your precious metals position for another year of market-beating results and protection of your other portfolio assets. You can also place your precious metals into a tax-deferred IRA plan. Call your representative for more details.  They make setting up a precious metals IRA easy!

Silver American Eagle Sales Soar 10-Fold in November 2020 Over November 2019

During November, the U.S. Mint sold 4,805,000 one-ounce Silver American Eagle coins, more than 10 times the 463,000 coins sold in November 2019, bringing the year-to-date totals to almost a 100% gain (29.3 million ounces vs. 14.8 million last year). Gold American Eagle sales were up 673% in November, with 85,000 Troy ounces sold vs. 11,000 in November 2019 that brought the 2020 11-month total up to over 5-fold from 2019 (794,500 Troy ounces in the first 11 months of 2020 vs. 150,000 ounces in 2019). The Buffalo Gold coin sales were also up strongly, +370% for November and +286% for the year-to-date

This powerful sales surge came despite the occasional work stoppages at the U.S. Mint, due to COVID-19 work restrictions and occasional stoppages due to the risks of workers placed in close proximity. There is no telling how many more ounces could have been sold if the Mint were able to operate at 100% capacity.  Increases in sales of U.S. Mint bullion products often increase the number of future rare coin buyers.  Call us today to discuss this important trend!


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