The question top of mind of any precious metals investor, as 2021 is about to kick off: “Which precious metal to buy in 2021.” Our gold forecast was all about the slow start in 2021, and acceleration to move to new all time highs in 2021. In our silver forecast we clearly made the point about silver following gold slowly in the year, but moving at least to $30 in 2021. Our platinum forecast is, by far, the most bullish one of our 2021 forecasts. As 2021 kicks off, platinum is in the process of preparing a secular breakout. This is really powerful. With all this in mind, it should be clear which precious metal we would pick and how to trade it in 2021.
Before we look at the answer to the question “which precious metal to buy in 2021” we want to spend a minute looking at the investing benefits of precious metals.
Are Precious Metals A Hedge Against Monetary Policies?
Before digging into the detail we wanted to point out that one of our followers on Quora requested us to answer his question. This user looked at precious metals as a hedge against monetary policies of central bankers. The never-ending depreciation of currencies is indeed a big concern. We also believe it is worth reviewing our viewpoint on this which really differs from the short term trading/investing decision we want to cover in this article.
This is our answer published on Quora yesterday:
Yes, commodities like gold, silver, platinum may be denominated in a currency, mostly in dollar terms … so there is always this ‘fiat currency’ hedge investing thesis. But let’s face it during the 2008 crisis the only two assets that went up were the U.S. Dollar and Treasuries. So the precious metals thesis as a hedge against fiat currency does not always apply.
Note that this is the long term viewpoint, and yes we challenge the idea of precious metals being a hedge against monetary policies. Between 2011 and 2019 your precious metals investment would have destroyed your wealth, while picking a few other investments and getting in / out would have helped you create much more wealth.
There Is A Precious Metals Bull Market Every Year
Last year we discovered over here at InvestingHaven that there is always a bull market in one of the 4 precious metals.
- There have been periods in which multiple precious metals were rising simultaneously. The largest part of 2019 is an illustration of this.
- However, we also see periods in which just one precious metal was rising. The year 2013 was such an example: palladium was the only precious metal on the rise while all 3 other metals were crashing.
- Gold has a track record of leading silver from a bear market into a bull market. Silver tends to be a laggard, though has explosive power once it starts trending.
- Platinum is mostly correlated to gold, but we have seen a couple of instances in which it was rising as gold was weak or flat.
- Palladium has a status of the outlier.
It takes some time to dissect this chart. It is certainly worth doing so because it really answers our question: which precious metal is worth buying in 2021?
The same chart as the one above is displayed below, but it is the monthly timeframe over approx. 10 years. It really shows how gold and palladium have moved up strongly and suggest some fatigue as 2021 kicks off.
However, silver is in relative terms not so over-rallied.
Clearly, this chart shows how platinum is the laggard. And we expect 2021 to be the year in which platinum transitions from laggard to leader.
Let’s look into our precious metals forecasts as well as this long term precious metals chart above, and derive an answer to the question “which precious metal to buy in 2021.”
Which Precious Metal To Buy In 2021? Platinum.
We will not focus on all precious metals charts in this section. We only look at the long term platinum chart.
And what a chart it is. Absolutely gorgeous.
Platinum is on the rise, and it is trying to break above 4 year highs now. This is attempt #4 to break out to a new bull market.
We believe it is a matter of time until platinum breaks out. And presumably early 2021 we will see the breakout confirmation.
This chart clearly suggests that the upside potential in platinum in 2021 is some 40 to 50%. We would not be surprised to see platinum peak around 1500 USD / oz ‘somewhere‘ in 2021.
And, as always, it’s all about timing.
Which precious metal to buy in 2021? #Platinum is the precious metal with the highest profit potential in 2021. We expect platinum to move to 1,500 USD/oz. Timing will be crucial for success. $PLATINUM Click To Tweet
In our Momentum Investing portfolio we focus on global markets, and pay special attention to precious metals markets. Most of our gold and silver mining positions in 2020 delivered great profits, and helped our portfolio double in 2020. We expect a longer term position in a platinum mining stock in 2021. And, yes, we already identified our top platinum mining pick, we just eagerly wait for the right moment to flash a buy alert.