Saturday, December 8, 2018

2019 should be a good year for gold, silver, and platinum

The price of rhodium ($2,410 an ounce) is leading the pack in precious metals, followed by gold ($1,247.80 an ounce), palladium ($1,209.00 an ounce), platinum ($792.00 an ounce) and silver ($14.58 an ounce). Which one will make the big break in 2019 to a major upswing?

Platinum vs. Palladium

I believe that the current price of platinum at $805 is a good entry point,” said Bill Stack, in an article posted on the U.S. Gold Bureau's blog Dec. 5. It has since dropped to $792.00 an ounce. Difficulties in the auto sector are largely responsible for platinum’s fall, “and I am not confident those issues will be resolved in 2019,” Stack said. “Platinum could go lower, to $750, with an upside potential of $870. This could come at the expense of palladium, which has temporarily surpassed platinum due largely to financial speculation. I believe 2019 will likely see platinum overtake palladium in price, but both struggle due to difficulties in the auto sector.” Commerzbank in Germany expects the platinum price to increase to $900 by the end of 2019 with palladium ahead at $1,100.

Gold vs. Silver

While a significant floor has been established for gold around $1,200, it is conceivable that we could see a dip to $1,160 or so during a market disruption or sell-off between now and December 2019,” Stack said.

“We are only slightly above the current average mining costs for gold, and below the average mining costs for silver,” Stacks said, based on data through the third quarter of 2018. “While many try to project gold and silver prices based mainly on supply and demand considerations, I believe a more accurate method considers the costs of production as a primary driver. If we use a base of $1,204 for gold and $16.10 for silver, then it would appear to be much more likely that any significant moves will be greater to the upside, than the downside."

With silver currently at a spot price of $14.45 (Dec. 5), it is currently below primary mining costs of $16.10. This analysis alone indicates that silver has significant room to spring to the upside. “Think of that - an 11.4 percent increase in the silver price is needed, just for silver miners to break even,” Stack said.

What about the upside? “I believe gold will close 2019 near $1,351 an ounce, and silver near $17.60,” Stack said. “While there may be spikes to $1,402, and $18.40 respectively, I believe that is where we will close the year.” Commerzbank sees gold at $1,350 and silver at $16.00 at the end of 2019.

Precious Metals Gains & Losses Year-to-Date (Dec. 8, 2018)
  • Rhoduim – up 34%
  • Palladium – up 13%
  • Gold – down 4%
  • Silver – down 16%
  • Platinum – down 17%

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