Gold Remains Bullish, But Lear Capital Notes You May Want to Also Consider These Precious Metals

Gold’s track record of performing well during both challenging and positive economic times has helped spur the demand for the asset over the years, according to Kevin DeMeritt, chairman and founder of precious metals firm Lear Capital.

In recent months, the multiple new high points gold prices have reached likely have contributed to the current interest in the precious metal. After hitting an unprecedented $2,222 per ounce on March 21, gold rose above $2,300 on April 4. Gold’s price later ascended to a record level of more than $2,400 an ounce on April 12.

Gold, though, isn’t the only precious metal you’re able to hold in a self-directed IRA account. Investors also can — and do — purchase silver and platinum coins and bars for a number of reasons.

Energy Needs Have Advanced the Demand for Silver

Silver possesses numerous favorable qualities, including an ability to resist corrosion and facilitate conductivity. 

Its role in solar photovoltaic power production has helped spur the growing need for the precious metal, which could continue to increase in 2024. The electric power sector’s solar capacity in the U.S. is expected to rise by 38% this year, according to the U.S. Energy Information Administration.

“You really can’t have solar [energy] without some silver in those panels,” Lear Capital’s Kevin DeMeritt says. “Because there’s this drive for green energy around the world, solar has grown, and so has the demand for silver. I don’t think solar [power use] is going away.”

Record amounts of silver have been used in industrial applications in the past two years, according to the nonprofit Silver Institute organization; in 2023, the overall demand for the precious metal surpassed the available supply of it for the third consecutive year, resulting in a deficit. The Silver Institute anticipates a silver shortage will continue to occur through 2027.

Lessened production of the precious metal has been an issue. The institute reported that reduced output from mines in Peru and China factored into the excavation decline in 2022. Mining setbacks, including regulatory concerns and political protest-related delays, also occurred in 2023. Challenges such as zinc mining operation suspensions could prove problematic this year.

Recycling practices aren’t expected to bolster the available supply much; the repurposing of jewelry and other silver items are projected to decline by 3% in 2024 to reach a three-year low, according to the Silver Institute.

Some analysts have suggested silver prices may rise in 2024. Marcus Garvey, for instance — head of commodities strategy at the Macquarie Group, a global financial firm offering wealth management and other services — told CNBC in March that if global growth, in general, accelerates, silver could potentially outperform gold in the third and fourth quarter of this year.

“Silver has become a highly in-demand asset, yet the available supply hasn’t vastly increased,” Kevin DeMeritt says. “You have this industrial demand that we really hadn’t seen over the past 20 or 30 years. At the same time, it’s a pretty good hedge against inflation. There’s going to be demand for silver from industrial uses, regardless if investors purchase it or not.”

Economic Expansion Can Propel the Interest in Platinum

Platinum, as a dense yet pliable substance, can be utilized in items ranging from computer circuits to medical devices. Automotive use, though, has comprised 30% to 44% of the platinum demand over the past five years, according to the World Platinum Investment Council. 

“It’s a fairly versatile metal with a lot of different industrial applications, and it has strategic applications,” Kevin DeMeritt says. “Most of the industrial applications come in the form of a catalytic converter, which is used to reduce emissions in automobiles.”  

Like other precious metals, the overall supply of platinum that exists in the world is limited, which has helped contribute to its value. The metal, according to the World Platinum Investment Council, is approximately 30 times rarer than gold. The total amount of platinum that’s mined each year is less than 7% of the amount of gold that’s produced, according to Lear Capital data. 

While gold can be a popular investment choice during periods of economic uncertainty, industrial demand can have an effect on platinum prices; the precious metal tends to specifically perform well during periods of economic growth, which may help provide short-term returns, according to Yahoo Finance. 

Platinum, for example, performed relatively well in the 1990s, Kevin DeMeritt says, when we didn’t see too much fluctuation until the end of the decade. 

“The platinum and palladium markets were great places to be,” he says. “People were using the metals in cars; everybody was buying a new car and the economy was expanding.” 

With the interest in emissions-reducing catalytic converters likely to remain high, Kevin DeMeritt believes the ongoing demand for platinum could be considerable. The global market for catalytic converters is predicted to experience a more than 7% compound annual growth rate and reach more than $20 billion by 2027. 

“With the green economy, everybody wants to continue to [use catalytic converters] — so the demand will continue,” he says. “I don’t think we’re going to have enough electric cars to take that away for the next 10 or 15 years.” 

The majority of the world’s platinum essentially comes from just two countries, Russia and South Africa, so supply issues could potentially increase the demand for it in the future, Kevin DeMeritt says — and economic changes could also escalate the interest in other metals. 

“Gold and silver are usually considered great inflation hedges,” the Lear Capital founder says. “If a recession takes hold, and we start to see financial instabilities happen around the country, the demand from central banks is going to intensify, along with demand from institutional and individual investors; [and] you’re going to continue to see that demand increase for precious metals.”