How have metals performed in past 1 Year?

Prices of metals have risen sharply in recent years. Few of the precious metals are many times costlier than what they used to be 3-4 years ago. Gold continued to rise this year too as investors flock for safe heaven on sight of weak economic recovery and deterring economic data. Demand of gold continues to remain strong in emerging economies like India and China which are the two biggest Gold consumers of the world.

In last one year silver has come to the party of rallying metal prices. Prices of silver moved from almost $18 to $48 in within one year. This was an exceptional move by any metal. While most of the world was looking at Gold Rush, silver gained many times its value an year ago. But a recent steep correction in silver prices are expressive of the fact that Silver is in no way the new Gold. It might have given good return recently but the risk associated with investing in silver can not be ignored. There are 2 main reasons why silver can not be a safe heaven like Gold:

Firstly, Gold is the second reserve in almost all the countries after Dollar. Governments are more likely to keep gold as reserve because of unstable Dollar peg against all the currencies.

Secondly, Gold has higher consumer demand and countries like India and China has high appetite for Gold which will keep the prices of Gold away from crashing down.

Silver, on the other hand, is less in demand by end consumer when compared to Gold. So, rise in Silver price was without much rational and correction was due to happen. Other, major metals to are rising on commodity cycle. Given below are performances of metals like Platinum, Zinc, Copper and Aluminum in past 1 Year.

 

High demand of metals in China had kept the metal prices high in the past. Now, it would interesting to see how the current cooling of Chinese economy will affect the prices of these metals. It might be too early to ask but are we coming to an end of ‘Boom’ phase of metal prices? With the exception of Gold, all the charts above are showing a cooling trend.

Hitesh Anand

I am a post graduate from Newcastle University, UK. I like studying and analyzing economic data and financial health of world.

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