Precious Metals Outlook for the Novice Investor

Precious Metals Outlook for the Novice Investor 5.00/5 (100.00%) 6 votes

Have you wondered about the precious metals outlook for the coming years? Most investors have given thought to where the precious metals prices might be headed, and this is due to the epic amounts of activity in the various precious metals markets over the past five years.

Though goods like gold and silver had always been consistent (albeit slow) growers in terms of value, since 2008, they have literally skyrocketed upward. This has led to many people assuming that a “cap” would be reached or a “bubble” would burst, but these views are very shortsighted.

The Reality of the Precious Metals Outlook

If you know anything about the current global market, you know that over the past five years almost all corners of the globe have experienced huge financial problems. This, in turn, impacted many global industries (such as auto manufacturing as an example). These industries slowed or even halted for a short while. Only in the past two years have some started to recuperate.

What does this have to do with the precious metals outlook? Let’s use the auto industry as a very good example. This is a business that occurs everywhere, with all kinds of large and small firms making their income from it. There are manufacturers who assemble cars, but many more that make parts.

Because the manufacturers of autos were some of the worst hit when the financial crises began, they slowed or halted production. This did not just limit their “shut downs” to their own factories. Their millions of suppliers were impacted too. For example, makers of catalytic converters were forced to halt production while waiting for things to “turn around”. They stopped buying materials, such as platinum, and this had its own impact.

When suppliers to the parts manufacturers lost their work, they too stopped producing. Many went out of business, but mining firms felt a blow because industrial demands for silver and platinum (two heavily used metals in auto making) dropped. Most of the metal producers slowed production, and many have yet to get back up to their original pace.

So, at that time the precious metals outlook was grim because there was not a huge demand. What happened next should have been anticipated, but was not.

How the Markets Changed the Precious Metals Outlook

Because the global markets were suddenly in such turmoil, millions of investors began buying up the available precious metals to hedge their portfolios against loss. This did not create a problem right away, but as markets were restored, the auto manufacturers and other major industries began asking for supplies from their vendors. Their vendors also began requesting the goods needed. The problem is that many precious metals suppliers have yet to begin mining heavily again. This is setting the stage for a major supply versus demand crisis, but it also means that those with holdings in precious metals have a pretty bright outlook. Their assets will continue to rise in price and value, and will eventually exceed expectations because of global shortages.