Gold gained $100 in the first week of December, rising from $1,762.55 on the final November 30 London price setting to $1,865 on Monday, December 7. In the same seven days, silver is up even faster, +11%, from $22.15 on November 30 to $24.60 on December 7. The U.S. Dollar index declined about 1% in the same week, but that doesn’t account for the nearly 6% rise in gold in that same time frame. The primary engine for rising gold and silver prices seems to be the fear of another major lockdown and the increased likelihood that another major stimulus (spending) bill will pass Congress this month.
With just three weeks left in this difficult year of 2020, it looks like both gold and silver will rise 20% or more, delivering their best annual performance since 2010, when gold rose 27% and silver rose 81%.
In December, it’s traditional to start looking at the year ahead, so we’re seeing some mainstream banks looking at the challenges ahead and predicting another 20% or larger rise in gold and silver in 2021.
Analysts at Citibank see gold rising to $2,200 in the short-term – on a three-month horizon – and then rising to $2,400 within six to 12 months. This marks an increase from their early July forecast of a 2021 high of $2,275, made shortly before gold ascended to its recent record high of $2,076.
A move to $2,200 within three months would be an 18% gain, and a rise to $2,400 is a gain of 28.7%.
Turning to silver, Barrons’ Commodities column quoted three analysts who predicted prices ranging from $30 to $40 in 2021. Those were brave predictions, considering that silver traded for $22 on November 30, when that issue went to press. If those predictions materialize, $30 to $40 silver represent 35% to 80% gains in 2021, based on November 30 prices, but a more realistic 22% to 62% gain from current prices.
There is a precedent for back-to-back silver gains of this magnitude: Silver gained 45.2% in 2009 (rising from $13.99 to $20.31, similar to this year’s gain). It rose another 81% in 2010 to $36.75 per ounce.
Among the three analysts quoted by Barron’s, the lowest figure for silver comes from Goldman Sachs analyst Mikhail Sprogis, who focused on silver’s role in solar panels, which should expand greatly during the coming Biden Administration. Solar applications account for 18% of silver’s industrial demand and 10% of total silver demand, according to Sprogis, who set a $30 price target for silver in 2021.
CIBC (the Canadian Imperial Bank of Commerce) predicts silver will reach $32 in 2021, citing the Fed’s low interest rate policies and rising federal debt as “supportive of further significant price appreciation.”
Citigroup analysts maintain a $40 price target on silver over the next 12 months, due to investors seeking safety, an increase in industrial demand, particularly with the robust industrial and private demands by China. Citi also sees 12% growth in 2021 for silver demand in traditional consumer segments like silverware and jewelry.