By Ivanka Pittelkau
Before we are fully absorbed in the holiday spirit and the year draws to a close, we are left with an occasion to review the past year and make plans for the new one. Many people are doing just that. This, people’s behaviour, creates a strong seasonal pattern in the precious metals market.
The price of gold, at the time of writing, is $1,478, up 15% this year having touched $1,550 (+21%) in September. If the current price holds, 2019 will turn out to be the best year for gold since 2010.
Gold is currently in a sort of holding pattern with a key reason being the macro picture: a slightly positive note on the US-China trade deal, a roadmap having been drawn for Brexit and the dovish stance of the Fed.
These have capped the gold price.
Uncertainty, however, still remains and the case for gold remains strong nearing the $1,500 mark again. All in all, 2019 has been a very good year for gold. In many currencies, gold recorded all-time highs with the exception of the USD.
Gold is positioned to remain an essential component of an investment portfolio now and in the future, allowing investors to navigate demanding passages in the market with greater peace of mind.
Silver is seasonally cheap in December
The Silver Spot chart shows the average price move of silver during a calendar year over the last 69 years with the horizontal axis showing the time of the year and the vertical axis depicting price information.
As can be seen from the chart, silver tends to post the strongest price gain early in the year and peaking close to the end of February.
As one can see from the blue arrow, this rapid advance in price begins around mid-December. Typically, the price tends to repeat again after February.
The key driver for this excessive seasonal demand is most likely the manufacturing industry.
Many manufacturers place their bulk orders at the beginning of the new financial year once annual planning has been completed and new orders can be booked.
Silver is currently grinding at $ 17.00 per ounce.
Platinum – a favourable December entry?
As the next chart indicates, Platinum exhibits a very similar seasonal pattern to silver; rising strongly from mid-December through to the end of February. Platinum shows a further seasonal advance in April.
At the time of writing, the price of Platinum stands at $934.00 per ounce.
Palladium has made history at $2,000 per ounce!
Palladium had an extraordinary event in this month’s power crisis in the number two producing country, South Africa, that squeezed the auto catalyst metal’s supply, delivering a historic $2,000 per ounce spot price. That’s higher than anything gold has ever managed.
Palladium fundamentals are strong, and remain so, with it being in a supply deficit and it has been heading in that positive price direction ever since it superseded platinum as the principal primary exhaust emission control catalyst for petrol (gasoline)-driven internal combustion engines.
The reason palladium became the exhaust emissions catalyst of choice for petrol engines is that it was greatly less expensive than platinum, the previous holder of that position, which led to considerable research into the metal as a potential emissions catalyst.
Room for thought: may the current price differential lead to a return of the platinum-based emission control catalyst to replace palladium?
Currently, Palladium stands at $1,933.00 per ounce which denotes a more than 60% gain since the beginning of the year. Palladium will be closing the year as the best performing precious metal of 2019.
Next edition: 4 January 2020: Precious Metals Outlook 2020.
Merry Christmas and a Happy New Year!
Ivanka Pittelkau is Precious Metals Consultant at Liemeta ME Ltd, a provider of physical storage of precious metals at its prime location in Liechtenstein as well as trade services of precious metals, mainly gold, silver, platinum and palladium.