Over the course of 2014, the gold market changed significantly. As the year progressed, investors became increasingly convinced that the prophesied hyper inflationary scenarios that had been predicted were not going to come to fruition, and as a result they abandoned gold, the traditional safe-haven that had promised to protect them from a threat that failed to arrive.
But that doesn’t mean that the age of metal investing is over. Gold may be on the backburner for now, but white metals are on the rise. Silver, palladium and platinum are frequently used in industrial production, and as the economy continues to strengthen, they’re more in demand than ever…
Around 45 per cent of the demand for silver now stems from industry, with the automotive, electronic, solar and photographic trades all utilising the metal. Platinum and palladium, too, are much sought after, with both being used in auto and truck catalytic converters to control emissions, as well as featuring in technological products such as LCD monitors, hard disk drivers, batteries, and electrodes.
The recovering economy has forced the demand for these metals into overdrive, as businesses look to invest in and upgrade the products they have made do with during the duration of the financial downturn.
The Hunger for Silver
Statistics for Commerzbank, an investment bank, have placed Chinese silver imports at 1,154 tons over the space of just six months in 2014. This reflects an increase of 16 per cent compared to the same period in 2013. The demand for silver directly correlates with an increase in the country’s PMI reading, which is used to gauge industrial production. With this trend set to continue into 2015, the hunger for silver is only going to increase. Similar PMI readings have also been reported in America, the Eurozone and Japan.
The Rise of Platinum and Palladium
Global automobile manufacturing also increased in 2014, by around 5 per cent, and this triggered a similar rise in demand for both platinum and palladium. This trend, combined with increased shale oil and gas exploration in America, and a growth in ethane/ethylene production, has seen the need for these metals increase around the globe.
But what does this really mean for traders in the metals market? The answer is simple; as demand for these white metals rises, so too do the returns for their investors. Could you be among the beneficiaries?
Categories: Precious Metals Market