Exclusive Precious Metals Outlook and Recommendations
Index updated January 1, 2021
The Blanchard Monthly Index is a roll-up of industry news and economic trends affecting the precious metals trading world.
Check back each month for insights and commentary from our leading experts and contributors.
The Blanchard Economic Report
It was a year many will be happy to forget.
2020 was a year dominated by a global health crisis, a divisive U.S. Presidential election, a deep economic recession and bear market.
Precious metals surged higher throughout 2020 – finishing with incredible double-digit gains at year-end. Big picture in 2020? Gold benefited from investor “risk off” market sentiment, crashing interest rates, and accommodative Federal Reserve monetary policies. Here’s how metals finished the year:
- Gold +22%
- Silver +44%
- Palladium +30%
- Platinum +8%
Precious metals outpaced the stock and bond market and performed beautifully in the face of a declining U.S. dollar.
Other 2020 results
- S&P 500 +16%
- US 10-year note yield 91%
- 1-year CD rate 55%
- US dollar index down 10%
Indeed, the final month of 2020 left most Americans eager for the New Year, a new chapter, and a fresh leaf.
Throughout the month of December, gold climbed steadily higher after retreating briefly to around the $1,800 per ounce level. The U.S. dollar continued to fall in the final month of 2020, which bolstered gold.
Bullish technical chart action
Notably, gold tested and held its key 200-day moving average in early December, which is a positive technical signal and confirms that the long-term uptrend in gold remains intact. Additionally, gold closed above its 50-day and 200-day moving averages at year-end, which signals the short-term trend points higher as well.
In the news: Congress passed a Covid relief bill
Going down to the wire in late December, Congress passed another emergency Covid stimulus bill – this one costs $920 billion. It included a renewal of the Paycheck Protection Program, direct stimulus payments of $600 to Americans who qualify and renewal of unemployment benefits and more.
Home sales remained depressed into year-end – despite record low interest rates.
Pending home sales in the U.S. fell for a third straight month in November, according to data released in December. Home contract signings dropped by 2.6% in November, according to The National Association of Realtors (NAR). The real estate market remains plagued by historically low inventory levels and rising prices.
Americans still filing for unemployment
Ten months after the first locally transmitted COVID-19 case hit the American continent, the unemployment picture remains dire. In the last week of December revealed that 787,000 Americans filed for unemployment claims during Christmas week.
- That jobless claims number is bigger than any single week during the Great Recession over a decade ago.
Consumer confidence tumbled in December. The Conference Board index falling 7.5 points to 88.6 in December from 96.1 in November.
Economic storm clouds are brewing on the horizon. Economists warn the worst may be just around the corner in 2021. In December, new COVID lockdowns emerged in some states, which means there aren’t as many jobs out there as those who need them. Millions of Americans were sitting in their cars waiting in mile-long lines for food at year-end. No, the U.S. economy has not found a firm footing yet.
Peering into 2021
Around the globe last year, investors big and small turned to the safety of precious metals. In a year like no other that we’ve seen, gold and silver outperformed the stock and bond market. Precious metals delivered investors portfolio diversification, peace of mind and double digit returns – and more of the same is forecast for 2021.
Indeed – many firms forecast new all-time highs for gold in 2021
- Societe Generale analysts projected that gold could reach as high as $2,340 per ounce in 2021. That represents more than a 20% increase from prices today!
- Goldman Sachs also has high expectations for gold in 2021. Analysts there have a $2,300-per-ounce price target for gold.
- Bank of America is also extremely optimistic about future gold prices. Their team expects gold to reach $3,000 per ounce citing that “the Fed can’t print gold.”
The forecasts are crystal clear.
This historic bull market in gold is just getting started. Even with a strong 2020 behind us, gold can still climb in value through 2021.
There is still time for you to increase your allocation to physical gold and silver and participate in the continuing price rise ahead.
The high-end rare coin market remains an attractive buying opportunity for long-term investors. Rare coins offer investors an opportunity for significant price appreciation in the current environment.
The appeal of rare coins to investors is their impressive historical price appreciation, which has outpaced the level of the underlying precious metal.
Buying Rare Coins
For investors able to hold 5–10 years, ultra-rare acquisitions offer the safest store of wealth and the strongest growth potential. Accumulate the highest-quality coins that you can afford. This strategy will pay off handsomely as rarity tends to appreciate the fastest.
Buying Precious Metals
An accumulation strategy is probably the best option for clients wishing to add to holdings.
Trading Precious Metals
Silver continues to offer a better value than gold. Generally, readings above 65 signal that silver is severely undervalued and is a strong buy signal for the metal.
Current Ratio: 72 oz. silver = 1 oz. gold
The gold/silver ratio is a way for investors to measure the relative value of these two metals. The ratio indicates the number of ounces needed to buy one ounce of gold. Investors have long turned to this ratio to identify attractive long-term entry points for precious metals purchases. A high ratio is generally viewed as a signal that silver is undervalued relative to gold. That is what we’re seeing now.
You may want to consider converting some gold holdings into silver.
Popular silver products: 10 oz. & 100 oz. silver bars, Silver American Eagles in monster boxes.