Despite the Federal Reserve hiking interest for the first time in almost a decade with more to come in 2017, gold could continue to find support in the ongoing low-rate environment, Gold said. Silver remains attractively priced relative to gold prices, with the gold-to-silver ratio hovering near its historic average. Platinum is currently showing a discount to gold at a 40-year high. Meanwhile, palladium is being supported by historic high automobile sales and industrial demand – palladium is used in autocatalysts in the car industry.
“Platinum also appears to be a much better value than gold. We see that gold today trades at roughly a $200, or 20 percent, premium to platinum. This is a high gold premium; in the past, gold has averaged a 20 percent discount to platinum. Platinum today is a much better value buy than gold, should investors be hunting for precious metal plays,” according to the Wells Fargo note seen in Barron’s.
Looking ahead, the ongoing negative interest rate environment, with European and Japanese central banks cutting benchmark rates deeper into the red to promote growth, could push investors toward precious metals as a more stable store of wealth.
Moreover, unlike gold, palladium, platinum and silver see much higher industrial demand. The precious metal enjoys heavy industrial demand that benefits from an expanding global economy.
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