Silver Will Be Top PM Performer in 2013

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Silver will benefit on multiple fronts in 2013. As the global economy picks up, industrial demand will escalate as well. As interest rates rise to curtail inflation, silver should win again, leading experts to believe that silver will be the top performer in the group. According to Joni Teves, an analyst for UBS, “Ultimately it is still the vote of confidence coming from investors that will have the more powerful impact on the silver market. More work needs to be done to encourage market participants to become more active in silver again – less violent price action and/or a stronger price uptrend are likely to attract flows. We have held the view that silver is poised to outperform in a QE environment.

 

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January is always the time when analysts polish off their crystal balls and make their best predictions for the years ahead, hoping to garner bragging rights if they hit their marks. Predicting future events in today’s era of globalization, however, is difficult, but planning for it requires some basic understanding of how it might unfurl. In the world of precious metals, there is no shortage of prognosticators, from both conservative and aggressive extremes. If you ignore the typical outliers, prospects are for modest gains.

 

The mean average of estimates for the precious metals group, if we focus only on gold, silver, platinum, and palladium, is for price increases of roughly 8% per year for 2013 and 2014. Silver and palladium are the higher performers, while gold is slightly below other metals. Each metal, however, will post positive gains in each period if analysts are correct. Weakening currencies will also play a role, as government officials continue their quantitative easing programs to address debt issues. Metal prices can only benefit.

 

Gold

 

As the global economic recovery gathers steam and uncertainty risk diminishes, the appeal of gold as a “safe haven” would naturally lessen, according to most estimates. Some analysts believe that some pent-up demand currently exists that must be vented in the near term. Current thinking, however, is that deficit talks in the U.S. will heighten fiscal concerns, while Europe remains a question mark going forward. Add continued strife in the Arab world, and you have the “tried-and-true” recipe that has always favored Gold demand.

 

Michael Widmer, an analyst for Merrill Lynch at Bank of America, sums up the general view, “Real yields, a key gold price driver, have flat-lined across various tenors, limiting investor appetite for gold. While large output gaps in advanced nations have generally

prevented a rise of inflation and inflation expectations, a likely pick-up in growth through the end of 2013 may alter this pattern.” As the global economic recovery gathers steam, inflation will only cause Gold prices to rise, as well. Timing is the major issue.

 

Mean 2-year averages for 33+ analysts: 6.6% for 2013 and 2.8% for 2014.

 

Silver

 

Silver will benefit on multiple fronts. As the global economy picks up, industrial demand will escalate as well. As interest rates rise to curtail inflation, silver should win again, leading experts to believe that silver will be the top performer in the group. According to Joni Teves, an analyst for UBS, “Ultimately it is still the vote of confidence coming from investors that will have the more powerful impact on the silver market. More work needs to be done to encourage market participants to become more active in silver again – less violent price action and/or a stronger price uptrend are likely to attract flows. We have held the view that silver is poised to outperform in a QE environment which is friendly towards risk assets.”

 

Mean 2-year averages for 30+ analysts: 11.5% in 2013 and 10.3% in 2014.

 

Platinum

 

Analysts see platinum returns as more favorable than gold. Per Anne-Laure Tremblay of BNP Paribas, “Platinum’s demand remains affected by the poor state of the European auto sector. However, the ongoing issues surrounding platinum mine supply in South Africa should counterbalance weakness in demand. Overall, we expect the metal’s fundamentals to improve in 2013, which will be supportive of a higher price.”

 

Mean 2-year averages for 25+ analysts: 9.0% in 2013 and 6.3% in 2014.

 

Palladium

 

Declining Russian stockpiles, increased investor demand, and optimism in the gradual economic recovery in the U.S. will drive palladium prices skyward.

 

Mean 2-year averages for 24+ analysts: 7.1% in 2013 and 11.7% in 2014.

 

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Comments

  1. Lost me after “As the global economy picks up”.

    • Yeah, that WAS quite a mouthful to swallow.  Still, the US economy should eke out a small gain this year and that should allow for some gains in the copper and silver markets.
       
      Stocks are off to a strong start in 2013 but there seems to be a widening disconnect between the stock market and the economy.  Many in the lame stream media equate these two, incorrectly, I think.  While they do converge from time to time, the current market is clearly surfing a wave of very cheap money being pumped out by the Fed, rather than any real economic strength.  
       
      Both Chrysler and Ford are doing well, though, which is good.  Lots of OLD cars out there now that are in need of replacement, so both the autos and their suppliers should have a decent 2013.  I can relate to this myself, being in need of a new or at least a newer vehicle.  My 1984 F250 is limping along but my 1999 Eldorado is running great.  Sure would like a truck upgrade sometime this year. Problem is, every time I think along those lines, I start thinking about how many ounces of silver that represents!  THAT is when you know that you have terminal silver-mania!
       
      As with the markets of the past 4-5 years, 2013 will definitely be a stock pickers market and not a “rising tide lifts all boats” type market.  The early stock market results of 2013 will definitely fade but probably not until the 2nd half.  Companies will be looking very closely at the coming tide of Obamacare costs by then and will be battening down the hatches in prep for it.
       
      My paper investments (yes, I see you cringing there in the back row) are primarily defensive in nature and in ETFs that I can set up with trailing stops and not have to watch constantly so that any wandering bears do not come along and make a good lunch of it.  Still, PPLT is doing VERY nicely now but sure was hairy when Pt prices plunged below $1400 an oz.  Other ETFs include big cap dividend payers, utilities, gold, energy, REITs, and farm commodities.  
       
      Not that these are all of my investments.  My silver hoard is decent now but I plan to add to it on any pull-backs below $31.50.  Would also like to add some gold but haven’t bought any yet.  This will probably be in bar format to help reduce the premiums that are attached to coins, although some of those Mexican 50 peso 90% gold coins can be had for only $15 over spot, which is also pretty attractive.
       
      Bottom line for me is to… stay diversified, buy dips, and keep on stackin’.  :-D
       

    • Ed, I also have some paper investments. Everyone needs a good stock pile of toilet paper and paper towels. Later, if all that runs out I can use dollar bills.

    • Good thinking, Crissy.  Paper IS useful stuff.  Every outhouse has some… or should, anyway.  lol
       
      On the other hand… I am NOT giving back any of the money I have made in paper.  As long as there are people who will accept it for phyzz, grub, and gas it DOES have value!  :-)
       
      I fully realize that there will very likely come a time when paper investments become either worthless or simply worth less.  This is what the stack is all about.  On the other hand, no one knows when this will occur, so if I can make phyzz-buying money from the paper markets before then I will.  
       

  2. ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ

  3. erm….. global economy picks up? doc? have you swapped sides?

    • This was from Forex Traders, not Doc. I think they were just pointing out that no matter what happens silver will win the day.

  4. Ed B  Keep your trailing stops closer and your silver closer.  Pinch profits–buy phyzz. 
    I save silver—I dont think Doc traded sides.  This is another post that brings some data sifting to our general themes.  There good intel if you dig a bit.
    I have no confidence in improvements of  global economy and the US economy for more reasons that I can write.  That problem could create a  sudden fear factor liquidation event that knocks down all asset classes including precious metals.
    10 yr UST is just above 2%.  Red arrows on the directions of all major GDPs. The top 20 GDPs are moving the wrong way. Spain, Italy and France give me the willies.
      Dow, S&P and Nasdaq are snorting the QE.   Private investors  are wandering back into the equity lion’s debt.  That is going to be a nasty trap for the smalls.

    • Snorting the qe! I love it – made me laugh! The bbc in uk were banging on about the ftse being at a high and best january since 1989 and I just sent them a text saying so what about the ftse? its only being propped up by all the fake money being spewed by the fed.
      Wait till interest rates go up. equities crash as result and the debt becomes unserviceable. Where will all that money go then? pms and commodities. Hypperinflation.

    • You got it, AG.  Being nimble is what a small investor is ALL about.  There are elephants and rhinos in this business but we shrews can nip out a bit for ourselves if we are too quick to be stepped on.  Been doing this for 35+ years now, so it can be done.
       
      No, the global economy is in worse shape than is the US economy and there is little doubt of that.  The EU boys-n-girls have papered over all the holes in their banking system but did no structural repairs at all.  A full blown collapse in Europe would not surprise me in spite of the apparent strength of the euro these days.  Virtually all of that strength is based on the public statements of the EU ministers.  I am convinced that their private comments are far less encouraging.  One of them was once quoted as saying something like “When things are really bad, you HAVE to lie!”.  That pretty well sums up how much trust investors can place in these people.
       
      Yes, QE continues and it IS inflating the prices of real assets.  This is called “inflation” by the classic economists.  Bernanke calls it “growth” but it really isn’t what anyone would sensibly call growth.  For one thing, the rate of growth is determined by the amount of business by which an economy exceeds its rate of inflation.  Currently, real inflation is 9.4% per http://www.shadowstats.com, whom I find to be trustworthy because they have no ax to grind in any of this… unlike the Fed / Gov… and not the 2-3% that Bernanke and Co. would have us believe.  But these lies have been expressed so as to not wake up and stampede the sheeple.  They are soft soothing words meant to calm the American public.  Those of us who are AAA (Awake And Aware), however, are not mollified by these lies.  If anything, we are angry about being lied to over and over.  Neither the Fed nor the Gov seems to have a clue at this point as to how to handle the economy, so they are doing a lot of things that are not helping but are hurting the economy.  This continuous barrage of political bickering and bad policies is doing nothing but creating a great deal of additional uncertainty that is not good for the market. The good news, if it can be called that, is that many investors are getting numb from all this BS and are starting to just ignore it.  Whether or not that is a wise thing to do is another question.
       
      Unfortunately for the Fed, millions of Americans actually shop for the things we need to live and KNOW that inflation is a lot closer to 10% than it is to 2%.  Inflation is usually expressed as an average but we all know that there are some items that have gone up 50% or more in the last year or two… or the packages have gotten smaller… or both.
       
      In spite of all this, however, there are still some places where money can be made and I intend to do just that.  All profits will be plowed into more phyzz.  I’ve made good money from both BIDU and PPLT and a bit from BTU and MCD.  The world of money is a place of great equality… it’s all green… and it all spends.  :-)
       

  5. I would just keep one eye on the 10 year Bond as it continues to rise. All mortgage loan interest rates are based on the 10 year bond. The little 10 year bastard just keeps going on up!
    http://finance.yahoo.com/q?s=%5ETNX

  6. The article says that silver and gold will perform in the 5 to 10% range for the next 2 years or so.  This means that buying the dips is critical.  The premium on a silver eagle is almost 10% right now.  If you buy the dip you have a chance of breaking even after the first year.  Be careful about your entry point.  Silver is not a get rich quick scheme.

  7. Buy when you can and forget the cost. It will balance out in the end.

  8. He starts “as the economic recovery gathers steam”. There has been no economic recovery. Real unemployment is at Great Depression levels of 23%. Gov. spending and fed printing have gone ballistic since 2008. Now comes the tax hikes of 2013 to put on the breaks of even a chance at a recovery. I hate to sound like a party pooper but the party is over for almost everyone but bankers and politicians! The sun is up and there is no more dancing around, it’s time to pay the fiddler.

    • “There has been no economic recovery.”
       
      Sure there has, RRG.  You’re just not looking at it correctly.  The banks and Wall Street have had a helluva nice recovery and it has all been fueled by very cheap or free money handed out by Bernanke.
       
      As to being a party pooper… well, maybe some parties SHOULD be pooped on!  If so, then this whole bankster looting of the US Treasury has GOT to be the ultimate example of it.
       
       

  9. With the US and Canadian mint sputtering out Silver bullion and suspending operations from time to time it seems like something has got to bust open like real soon.  I’ve got more than my fair share.  Bring it on.  

  10. “ As the global economy picks up”   Huh?  Some analyst.  The global economy is not going to pick up anytime soon!

  11. “As the global economy picks up” means that it will pick up speed on its descent before it burns up on re-entry. LOL!

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