Bloomberg: Gold to outperform S&P 500 & Bonds in 2021

This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Gold to spearhead precious metals’ outperformance in 2021, why 2020 was a very good year for national mints, and birdwatcher unearths biggest-ever hoard of Celtic gold in Britain.

Bloomberg analysts: A $2,000 price tag will make gold the asset to beat in 2021

Among traditional assets, it would be difficult to beat gold for the title of top performer in 2020. Having hit a new all-time high of $2,070 in August, the metal has traded around its previous all-time high of $1,911 ever since. And though gold has appeared somewhat rangebound over the previous months, Bloomberg Intelligence senior commodity strategist Mike McGlone sees this as a stepping stone on the way towards an even better year.

According to McGlone, the $2,000 level that gold appears to have had difficulty recapturing is poised to become the metal’s next support, making it the asset to beat once again. “In an investment landscape increasingly dominated by how low — or negative — central banks will set base rates, along with rising debt-to-GDP and QE, we see the foundation solidifying under the price of gold. Resistance at about $2,000 an ounce in 2020 is set to transition to support in 2021,” he explained.

McGlone added rising volatility to the list of reasons why he can’t imagine gold’s price rise stopping, especially as the metal has held steadfast to its upwards-pointing 12-month moving average. In what has by now become a common scenario, McGlone expects gold to continue outperforming the record-setting S&P 500 along with sovereign bonds.

Like many other analysts, McGlone is looking for silver to outperform this year due to a unique combination of factors. Besides the investment element in the form of high inflation expectations, silver is also set to benefit from a recovery in the manufacturing sector and a global push towards green energy.

McGlone believes gold will end up pushing other metals upwards like the bull run of 2008-2011, when the average daily price of gold started at $872 in 2008 and ended 2011 at almost $1,600. McGlone believes we should expect to see silver as a high as $50 in 2021.

The data behind the massive sales of various national mints last year

The most basic market dynamics dictate that supply must meet demand, and one of last year’s hallmarks was a voracious appetite for gold and silver bullion. Though bullion demand came from all corners of the world and caused widespread shortages, the brief glut that New York experienced with its derivatives was perhaps the best example of why physical gold and silver are never unwanted possessions. Unsurprisingly, the national mints of the U.S., Australia and Canada posted some of their best years on record as demand for coins and bars grew with each passing month.

The U.S. Mint’s sales figures stand out, with a massive 509% year-on-year increase in gold coin sales and a doubling of silver coin sales compared to 2019. Through its American Gold Eagle, American Silver Eagle and American Gold Buffalo programs, the world’s largest coin manufacturer sold 1,086,000 ounces (33.78 tons) of gold and 30 million ounces (937 tons) of silver. While both gold and silver had months of peak demand, silver showed a steadier distribution of sales throughout the year.

The Royal Australian Mint coins, which include the Australian Kangaroo and Lunar series of gold coins and the Kangaroo, Lunar and Koala series of silver coins, were likewise wildly popular. Over the 12-month period, the Perth Mint recorded a total of 778,797 ounces (24.2 tons) sold in the form of gold coins and bars, a 100% increase over the previous year. The mint stated that the average monthly sales for both gold and silver were 48% and 56% higher than long-term averages, respectively. And while March was a month of peak demand for both mints, the Perth Mint recorded April as the second highest month in terms of demand for gold and silver.

While the Royal Canadian Mint (RCM) doesn’t publish weekly or monthly sales figures of its 1-oz Gold Maple Leaf and Silver Maple Leaf coins, there was still plenty to glean from its quarterly reports. In the first quarter, the RCM sold 198,100 ounces of gold bullion, marking a 60% increase compared to 2019. The 6.6 million ounces of silver bullion were likewise a 20% increase over the previous year. Sales continued rising with 196,500 ounces of gold sold in Q2 and 300,100 ounces sold in Q3. Meanwhile, sales of silver reached 7.2 million ounces in the second quarter and 8.2 million ounces in the third quarter.

Although the RCM is yet to publish its full report for the year, we can reasonably assume its sales of both gold and silver bullion have at least doubled compared to 2019. Similarly, the anticipated annual sales reports from the Royal Mint of Britain and the Austrian Mint are likely to provide more tales of intense demand for high-grade bullion.

Biggest-ever hoard of Celtic gold worth £800,000 ($1 million) found in Britain

Past the exceptional value of the hoards in question, the antique gold and silver coins that are regularly found on Britain’s soil often provide insights into the nation’s history, making them of particular interest to local museums and historians. The same is true of the latest find discovered by a birdwatcher in east England, who stumbled upon a particularly old stash in the area.

The sharp-eyed birdwatcher noticed a glitter sticking out of the ploughed field and investigated what would turn out to be the first coin in a large stash dating back to 40-50 A.D. After uncovering the first gold stater, the birdwatcher grabbed his metal detector to scour the site for more treasure, eventually winding up with a hoard of 1,300 coins. Each of the coins has been estimated to be worth up to £650 ($880), making the entire collection worth roughly £800,000 ($1 million).

a Iceni gold stater from the 1st century CE

The Iceni were a Celtic tribe in Britain who began producing hand-struck coins in 10 CE. Iceni staters are easily identified from those made by other tribes because of the distinct and unusual representation of the horse’s head. Gold staters are about the size of a dime and weigh approximately 6.7 grams (0.22 troy oz.)

The hoard’s size and value places it above a previous find of a similar nature, one that saw a prospector excavate 850 coins in Suffolk in 2008. Both hoards date back to the period when Celtic tribes were at war with the Romans, and the larger hoard is thought to be related to the Celtic warrior-queen Boudicca.

While authorities haven’t yet decided whether the hoard will be kept by the finder or given to a museum, the owner of the field will receive proceeds from the find.

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