We recently published our forecasts on all 4 precious metals. If we merge all insights from those forecasts we can derive an answer to the question “which precious metal to buy in 2020.” Our gold forecast was all about the breakout that took place recently, and a new gold bull market in 2020 and beyond. In our silver forecast we clearly made the point about silver slowly but surely preparing to outperform gold starting in 2020 and 2021. Our platinum forecast was all about the major breakout that is brewing. Not there yet, but clearly it is underway. Lastly, in our palladium forecast we said that palladium is at a pivotal point. It may set a blow off top or will go significantly lower, it really depends. With all this in mind, it should be clear which precious metal we would pick and how to trade it in 2020.
Before we look at the answer to the question “which precious metal to buy in 2020” 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 2020?
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 2020.”
Which Precious Metal To Buy In 2020?
As 2020 kicks off we want to be invested in the most profitable precious metal. Right now, we see the following happening in each of the 4 precious metals.
Palladium is the most powerful in terms of uptrend. However, it touched $1,958 a few days ago. It certainly has more upside potential, but we want to be cautious as it comes close to $2,000 and as it trades right at the top of its rising channel. More upside is certainly possible, but from a risk management perspective this may not be the best choice in 2020.
Platinum is on the rise now. However, it did not break out to a new bull market technically. As long as it is still in its bearish pattern we prefer to avoid exposure. This obviously can change through out 2020, we may see a reversal lead to a breakout. But we are not there yet. So again from a risk management perspective we prefer to avoid platinum for sure in the first part of 2020, until proven otherwise.
Gold broke out officially in June of 2019. This is what we wrote a year ago in the same article: “Gold is picking up steam to attack its 6 year stubborn bear market wall ($1375). Only if it succeeds in breaking through $1375 will the gold market become really bullish for the medium and long term. Note that our forecast for gold is $1550 by the end of this year, with our forecast of gold breaking through $1375 after summer of this year. This forecast was featured both on Barron’s and MarketWatch yesterday: Why gold’s a ‘bargain’ at less than $1,300 an ounce (MarketWatch) and How Gold Could Stage a 20% Rally This Year (Barron’s).”
Silver, however, should be the ‘real deal’ in 2020. That’s because gold is leading the way higher for both gold and silver. We know from history that silver is slow at the start of a new bull market, it needs some warming up time. However, it accelerates over time. Initially silver shows a few spikes higher, and eventually takes over control to largely outperform gold.
So there you have the answer to our question: silver has the most potential in 2020 provided you trade in and out in the same year. We believe silver will set one or two spikes in 2020. Timing the entries and exits will be crucial for success.
Ed. note (added on February 9th, 2020): we believe the gold and silver market is taking a breather. Let’s give the gold and silver market the time they need. In the meantime palladium is getting very close to our projected 2500 USD target. Platinum is attempting to move to the resistance area of 1100 USD.
Which precious metal to buy in 2020? #Silver has the most potential in 2020. Silver will set 1 or 2 spikes in 2020. Timing the entries and exits will be crucial for success. $SILVER $SLV Click To Tweet
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