Welcome to Kitco News’ Perspectives 2022 series. The new year will be filled with uncertainties as the Federal Reserve seeks to pivot and tighten monetary policies. At the same time, the inflationary threat continues to grow, meaning that real rates will stay in low to negative territory. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2022.
(Kitco News) After a disappointing year for gold and silver, Main Street expects the bearish tide to reverse in 2022, picking both metals as top performers in the new year, poll shows online from Kitco.
Gold ended the year down 3.6%, posting its biggest annual decline since 2015. Silver closed 2021 with a drop of 11.5%, which was the metal’s biggest drop since 2014 .
Both metals failed to gain traction over the past year despite the hot inflation rhetoric as a strong economic recovery and more aggressive outlook from the Federal Reserve weighed on prices.
Retail investors are hoping the downtrend has peaked, with Kitco’s survey results showing participants almost evenly split between gold and silver as the top two picks for top performers in 2022.
Out of 1,569 respondents, 32.7% chose gold as the best performer for 2022, while 32.1% chose silver. The third most popular metal for next year was copper, with 12.9% of respondents betting on the red metal. 9.2% chose lithium and 6.7% chose Bitcoin. Platinum only garnered 4.5% support, followed by palladium at 2%.
The Wall Street side is also bullish on gold and silver over the long term. Analysts told Kitco gold is well positioned to rebound with interest rate hikes, while silver has a chance to catch up after lagging behind gold for months.
“After facing many headwinds in 2021, we believe the upward path for gold looks clearer in 2022. Moderating stock market returns and concerns about inflation could pull the market back. the center of attention and return to the yellow metal next year. [The] The greenback won’t be a substantial headwind in 2022 like it was in 2021, ”Wells Fargo said in its outlook. “While we are optimistic that gold may finally rise in 2022, a stronger price trend may take some time to develop, prompting us to lower our end-of-year 2022 target range to $ 2,000 – $ 100. “
BofA also highlighted the rise in gold in 2022 while highlighting the positive outlook for silver and platinum. “As gold markets refocus from tighter monetary policy on how rates can rise, the gold should rally; we think 10-year Treasuries above 2.5% are difficult to maintain. The increased investment in solar panels is expected to boost the cash. Platinum is the rebound trade on the normalization of chip shortages in the automotive industry; substituting palladium should also help, ”the bank said.
Bloomberg Intelligence sees gold outperforming other metals in 2022, citing enduring trends favoring the precious metal.
“A main question for 2022 could be to know what is preventing gold from regaining the upper hand over most commodities, and our bias is to favor lasting trends (especially since the financial crisis), which favor precious metals more than industry and the metals sector relative to broad commodities, ”said Mike McGlone, senior commodities strategist at Bloomberg Intelligence. “As of late 2007, the roughly 115% gain in gold has been based on an unlimited supply of fiat money. Greater supply elasticity is a headwind for copper. Indicating the difference for investors, the Bloomberg Copper Subindex Total Return is around 20% versus 40% for the place. “
After largely ignoring the problematic inflation narrative for most of 2021, markets are increasingly concerned about mounting price pressures, Gareth Soloway, chief market strategist at InTheMoneyStocks.com told Kitco News. .
“What I’m optimistic about is gold. It will be the best performer here in 2022. You should see a rise to the highs from 2020. There is even potential for a price target of 3,000. $ on gold. You have to look at the inflation numbers. I don’t think inflation will go back to 2%. The Fed will go down, but eventually people will turn to gold, “Soloway said.
And if gold does well in the new year, silver has a chance to outperform the yellow metal, analysts said.
“There’s definitely this catch-up story built into there. It has underperformed gold to date. And you will find that investors will look to the silver market as a result,” said Daniel Hynes, senior raw materials strategist at ANZ.
The gold-to-silver ratio also indicates silver’s outperformance, noted Jordan Eliseo, manager of listed products and investment research at Perth Mint.
“The very fact that the gold-to-silver ratio is around 80: 1, that alone suggests that if gold is going to rise, silver at the very least is going to come in and could very possibly surpass gold,” Eliseo mentioned. . Money also benefits if commodities as a whole are doing well. If economies are performing relatively well, it should benefit from an industrial perspective and the whole ESG transition that is taking place in the economy. “
Silver has the best chance of increasing in 2022, said Everett Millman, precious metals expert at Gainesville Coins. “It’s so cheap compared to other metals and other raw materials. And it features prominently in emerging technologies and green energy. It’s a perfect storm for the money to burst. well in 2022, especially after it’s really lagging behind gold in recent years, ”says Millman.
Analysts have also pointed to the upside potential for platinum in 2022 due to its supply-demand fundamentals.
“Platinum doesn’t have all the conspiracy and short sellers that silver has. The market is smaller. There aren’t many players involved. You have supply issues, but they are. being solved. You will see the demand for platinum return. When the supply chain issues are resolved, you should see that platinum is the one that outperforms the rest. It is one of the underdogs of the last year, ”Phillip Streible, chief market strategist for Blue Line Futures, told Kitco News.
Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.