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Inside Citigroup Inc.’s (NYSE:C) 2013 Precious Metals Outlook

December 7th, 2012

Jared Cummans: As 2012 nears its close, investors are beginning to look toward a new year, one that will hopefully be less volatile for the commodity world. The precious metalsworld, in particular, saw a fair amount of volatility through out the past year as this elite group of four has rarely had a quiet period. With the approaching fiscal cliff and economic uncertainty fresh in the minds of many, predicting where these commodities will end up next year has become a hobby of analysts all across the market.

Citigroup (NYSE:C) recently came out with their forecast for these four metals for the coming year, and they have some insights that investors may want to pay attention to prior to making allocations.

Gold To Gain…For Now


Gold’s average price in 2012 fell at $1,679/oz, and Citi expects the yellow metal to add to that tally for the coming year. Citing President Obama’s re-election and the continuation of a “dovish monetary policy,” the financial juggernaut has pegged gold to average $1,750/oz for next year, a gain of 4.2%. But Citi also predicts the metal to contract in 2014, back down to $1,655. Note that this would be the first annual loss for gold prices in 13 years.

Silver Not So Shiny

Jim Rogers may have called silver a better investment than gold, but Citi is not so sure that sentiment will hold true for the next 24 months. This white metal averaged $31.3/oz this year, and that is expected to dip to $31.0 for 2013 and all the way to $26.5 for the year after. The banking giant points out that silver will see a supply increase, but will be damaged by weakening supply in the industrial and jewelry segments; two of silver’s biggest.

Platinum Ready to Run

The other white metal averaged $1,556/oz this year, but that number is expected to climb fast. Citi is forecasting for platinum to jump to $1,675 in 2013 and then to $1,775 for 2014. All in all, that would mark a gain of 14% in two years if everything falls Citi’s way. Note that this means that the bank is predicting for platinum to overtake gold in price in 2014. Though platinum has been volatile because of the ongoing mining strikes in South Africa, “Citi projects a balanced market for platinum between 2012 – 2014 and a deficit from 2015 on.”

Palladium to Outshine The Rest

Palladium is a black sheep of sorts, as it very rarely gets the same attention that its three counterparts do. But for those who do pay attention to this metal, things seem to be quite rosy for the next few years. Citi thinks that this year’s average price of $638/oz will be shattered in the next two years, with prices shooting up to $744 in 2013 and $925 the year after. That would mark a 44% increase in just two years for this precious commodity. With auto markets recovering, Citi predicts that growing demand and tight supplies will lead to a deficit in the palladium market, pushing up prices.

Related: SPDR Gold Trust (NYSEARCA:GLD), iShares Silver Trust (NYSEARCA:SLV), Platinum ETF (NYSEARCA:PPLT), Palladium ETF (NYSEARCA:PALL).

Written By Jared Cummans From CommodityHQ 

CommodityHQ offers educational content, analysis, and commentary on global commodity markets. Whether you’re looking to speculate on a short-term jump in crude or establish a long-term allocation to natural resources, CommodityHQ has the information you need.


NYSE:GLD, NYSE:PALL, NYSE:PPLT, NYSE:SLV


 

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