Precious Metals Year in Review 2010
Demand for precious metals among investors continued to be strong in 2010, as fiat currencies continued to be undermined by inflation fears and successive financial crisis, causing investors to flock to the perceived safety of gold, silver, platinum, and palladium as a hedge against uncertainty and instability.
The falling values of both the U.S. Dollar and Euro have been attributed to expansionist monetary policies of the Federal Reserve and European Central Bank. The month of November was significant in regard to precious metals. At the beginning of the month, the Federal Reserve announced a further $600 billion injection of money into the economy. This move had been anticipated among investors since August, as reflected by the uptrend in precious metal prices that month.
Also in November, the sovereign debt crisis in the European Union gained new traction. Earlier in 2010, Greece had to be rescued. This time Ireland was in need of a bailout, and speculation has been widespread that other nations on the periphery of the Euro are also in danger.
The rising interest in owning precious metals in China has also been an important story in 2010. The rules and regulations that surround precious metals sales are being relaxed, allowing private Chinese citizens greater access to the precious metals market. According to the Wall Street Journal, the Shanghai Gold Exchange, trading volume increased 43%, to 5,014.5 tons, in the first 10 months of 2010.
| 2010 Spot Price Summary (U.S. Dollars) | ||||
| Silver | Gold | Palladium | Platinum | |
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| High | $30.96 | $1423.25 | $804.50 | $1774.20 |
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| Low | $15.08 | $1068.00 | $405.74 | $1470.50 |
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| Open | $16.93 | $1098.70 | $410.50 | $1470.50 |
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| Close | $30.96 | $1423.25 | $804.50 | $1772.50 |
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CONTENTS
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Precious Metals Year in Review 2010 |
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Gold and Silver |
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Platinum and Palladium |
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CHARTS
The following charts display the daily low and high spot price of each metal for the year of 2010. Source: Northwest Territorial Mint spot prices as posted at bullion.nwtmint.com.
Gold and Silver
by Northwest Territorial Mint Staff
In 2010, both gold and silver have maintained their traditional roles as safe assets in times of economic distress. Interest in each has grown over the year as fiat currencies continued to decline in value.
The demand for gold in 2010 was quite strong. Already benefiting from the economic instability coming into the year, an increasing number of individuals turned to gold as the value of the U.S. Dollar continued to spiral downward.
Gold, up 30% for the year, began a steady ascent upward during the month of August in anticipation of further monetary easing by the Federal Reserve. As a result, gold prices broke through the $1,400.00 per ounce mark in both November and December. Gold began the year trading at $1,098.70 per ounce, and finished at $1,423.25 per ounce.
The increase in demand for gold is coming from all corners of the globe. The unfolding sovereign debt crisis in the European Union has created yet another impetus to spurn paper money for gold. On the other side of the globe, Chinese investors are putting their money in gold as a store of value amid inflation concerns and artificially low interest rates. According to a report in Bloomberg, low interest rates are causing Chinese savers to lose $236 billion a year in lost income on their bank deposits.
As gold prices have risen to record highs in 2010, silver has emerged as an attractive option for those not entering the gold market, but still wanting to use precious metals as a hedge against the declining value of the U.S. Dollar.
Silver, up 83% for the year, has reached price levels not seen in 30 years. The fundamentals driving silver in 2010 have been strong. Demand has been up among investors as a less expensive alternative to the other precious metals, while at the same time benefiting from the increasing use of silver for industrial applications. As noted in a recent report by The Silver Institute, industrial demand is the most significant component of silver’s demand equation, totaling 352 million ounces last year. Respected precious metals research consultancy GFMS projected an 18 percent increase in silver industrial demand for 2010. Silver began the year trading at $16.93 per ounce, and finished at $30.96 per ounce.
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Platinum and Palladium
by Northwest Territorial Mint Staff
Both platinum and palladium have benefited from the increased demand for automobile catalytic converters. The U.S. and European Union have enacted stricter emission standards for automobiles and trucks, while at the same time China has surpassed the U.S. as the world’s largest auto market.
The Wall Street Journal reports that Johnson Matthey, which supplies one-third of the market for platinum- and palladium-coated catalytic converters, reported a 72% rise in heavy-duty diesel catalyst sales. Reports indicate that Johnson Matthey believes that the market for heavy-duty diesel catalyst converters could be worth up to $2.5 billion over the next 5 years compared to just $600 million today.
The rise in sales can be attributed to increased catalyst demand, with U.S. truck sales up 17%. But nearly half was the result of tougher new U.S. regulations introduced in January. Following the U.S., the European Union is also imposing tougher heavy-duty diesel emission rules on a variety of engine sizes over the next four years.
For the first time in history, China sold more automobiles than the U.S., according to a report from the China Association of Automobile Manufacturers. Vehicle ownership has soared, from just 1 million in 1977 to over 51 million by 2008, according to Bloomberg.
Platinum, up 21% for the year, is more efficient in absorbing diesel-engine emissions than palladium, the catalyst of choice in the gasoline-dominated auto sector. Platinum began the year trading at $1,470.50 per ounce, and finished at $1,772.50 per ounce.
Palladium, up 96% for the year has benefited from the increase in automobile sales worldwide, as well as fears of a potential supply crunch amid speculation of depleted Russian stocks (Metals Mining News). Palladium began the year trading at $410.50 per ounce, and finished at $804.50 per ounce.
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Contents © 2011 Northwest Territorial Mint.
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