Today, professional investors are paying more and more attention to precious metals. The demand for gold is constantly growing, which justifies the positive dynamics of the price.
It should be noted that in general, the precious metals market is not characterized by uniform dynamics. First, this happens because the structure of demand for silver, platinum, palladium and their supply is strikingly different. For example, the share of demand from the jewelry sector for gold consumption is 50%, for platinum – 30%, for silver – 20%, and for palladium – only 5%.
Also, it is important to clarify that all these metals are perceived differently in terms of investment. The most popular metal is gold.
Approximately 40% of the demand comes from investments such as the production of coins and bars, which are then used by central banks to replenish their gold and foreign exchange reserves. In terms of the share of investment demand, after gold are:
- Silver – 15 – 20%
- Platinum – 5 – 10%
- Palladium – Less than 5%
There is also a significant difference in the consumption of metals in the industrial sector. For example, 80% of mined palladium is used in the production of automotive catalysts. The industry is quite specific. This metal is completely tied to the situation in the automotive industry.
For the industrial sector, at the moment, the most relevant is the use of silver. 60% of the demand for this metal is covered by this particular area.
Today, gold and palladium have the greatest prospects for price increases. Against the backdrop of the ongoing conflict between the United States and China and the slowdown in global economic growth, the demand for defensive assets continues to grow. Gold is the most reliable instrument. Also, the growth in prices for this metal is facilitated by the trend towards lower rates in the US.
Investments in palladium are a kind of bet on the growth of demand from the engineering industry. It is important to note that this metal is not as sensitive to global factors. Structural changes in the industry, such as an increase in the share of hybrid and electric vehicles, will continue regardless of the state of the global economy.