A Year Like No Other for Precious Metals... and Everything Else / Commodities / Gold & Silver 2020
Well, it’s been a year like noother in so many ways. “Unprecedented” is an often-overused term. But theretruly is no precedent for much of what transpired in public health, politics,the monetary system, the economy, and markets.
More than 300,000 Americansreportedly lost their lives while infected with COVID-19. Less widely publicized was a spike in deathsof despair due to lockdowns and related social ills that drove all too manyinto depression and drug addiction. Orthe deaths that were caused, or will be caused, by Americans putting off oravoiding doctor’s visits.
America’s cities burned whilethe mainstream media egged on anti-police protests. In their aftermath, recordsurges in murders and other violent crimes followed across the country.
And irreplaceable historicalmonuments, some of which had stood for more than a century, came down one afterthe other. First they came for Robert E. Lee, then they came for Francis ScottKey, Christopher Columbus, Thomas Jefferson, and even Abraham Lincoln.
Amid all the suffering andturmoil, Wall Street celebrated new record highs in stocks. An unprecedentedtsunami of liquidity generated by the Federal Reserve pushed asset priceshigher across the board.
In late July, gold ascended tonew all-time highs in nominal terms. Even the Wall Street-centric financialmedia had to stand up and take note
Goldprices lost momentum in the fall as rising equity markets stunted safe-havenbuying. But the monetary metal still finished 2020 with strong gains –outperforming the S&P 500 for the year overall.
Gold ends 2020 at $1,900 perounce. That’s a record high close for a calendar year and comes on the heels ofa 25% annual gain.
Turning to silver, the marketexperienced an even wilder ride than gold in 2020.
Silver got historicallyoversold versus gold in March at the height of the COVID panic. The gold tosilver ratio spiked to an historical extreme of 130:1.
At that time silver pricesplunged briefly below $12 an ounce. Bargain hunters flooded into the bullionmarket, clearing out dealer inventories and driving premiums markedly higher.
Spot prices soon followed suit.Silver embarked on an epic rally that took prices all the way up near the $30level in early August.
The white metal is finishingout the year at $26.50 an ounce to record a yearly advance of over 45%.
Looking ahead to 2021, themonetary macro backdrop and fundamental drivers for precious metals are likelyto remain favorable.
The Fed has effectively taken arate hike off the table for 2021 and beyond. It has no plans to curtail its$120 billion in monthly asset purchases.
And the federal budget deficitwill continue to skyrocket under the next administration – perhaps to $4trillion per year.
Uncertainties remain andinvestors should be prepared for anything. We still don’t know how exactly theglobalist Great Reset will play out.
Part of the agenda, though, isa reimagining of monetary policy to include globally coordinated central bankaction on climate change and social justice – whatever that’s supposed tomean.
The Fed may begin more formallyembarking on Modern Monetary Theory -- or print-on-demand financing forgovernment.
It has already announced itwill no longer pursue price stability as it used to be understood. Instead,central bankers will allow prices to run above their 2% target for an undefinedperiod before they even think about tightening.
As the virus fades later in theyear, inflation risks may come into focus. Of course, at the core of anyinflation protection strategy is physical gold and silver.
Silver could also benefit fromrising industrial demand as the economy improves and officials push moreaggressively for “green” energy.
Solar power and batterytechnologies are experiencing explosive growth, and with that growth comes aneed for lots more silver. In fact, solar panels are one of the fastest growingsources of silver demand.
Some analysts expect to seewidening supply deficits for silver and platinum in 2021 as the battered miningindustry struggles to increase production.
A new nominal high in silvercould be in the cards for 2021. And the gold price could begin to tradesustainably above $2,000 an ounce. That could happen quickly if it gets off toa good start to the year.
We will get some clues as tohow the New Year will treat precious metals and other asset classes whenmarkets open next Monday.
By Mike Gleason
Mike Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.
© 2020 Mike Gleason - All Rights Reserved
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