In this article, we will dive deep into the context under which the Precious Metals – Silver, Gold, Platinum and Palladium are priced in the global markets, how the context is transitioning from 2024 to 2025 and what to expect as 2025 progresses from the perspective of an investor interested in diversifying their investments across one or few of these precious metals.

2024 – The year that was for Precious Metals 

Gold in 2024 

2024 had seen Gold rally until October and dip a bit after the conclusion of US elections. 

Below are the highlights of Gold in 2024: 

• US Fed and some major countries’ Central banks took a dovish stance and implemented interest rate cuts. This resulted in decreased yields from Treasury bonds and Gold was preferred over Treasury bonds leading to continued rally of Gold.

• Global wars – Russia – Ukraine war and tensions in Gaza and Lebanon, owing to tensions between Israel and Iran. As is the historical trend, these tensons led to higher investments in Gold as a safe haven asset.

• Central Banks across the globe continued accumulation of Gold reserves in light of the global tensions, depreciation of their respective currencies and inflation within their economies.

• Indian Government had announced import / customs duty cut on precious metals. This had major impact on gold purchase by Indian households (for Gold the import duty was reduced from 15% to 6%).

Silver in 2024 

Silver plays a dual role - as a precious metal as well as an industrial commodity. As a precious metal, it does act as a store of value / safe haven similar to Gold. Below are the various highlights of Silver in 2024: 

• Dovish stance and interest cuts by US Fed and other major Central Banks had a similar effect on Silver like Gold, resulting in a bull rally.

• Similarly, the global wars had much the same impact on demand for Silver as a safe haven asset.

• Silver’s usage in Photovoltaic cells in Solar panels meant the increased interest in Solar energy rubbed off on Silver demand.

• Silver is a key component in the semiconductor chips that power Artificial Intelligence (AI).

• Even in 5G technologies, Silver plays a key role.

• Gold/Silver ratio is at about 85:1, which has much scope to reduce to historical average between 40 to 70.

• Supply of Silver does not show signs of growth to meet the anticipated surge in demand. 

Platinum and Palladium in 2024 

Platinum and Palladium remained flat (while Palladium showed more volatility within the range) during 2024 owing to the below:

• The mining supply-demand gap of Platinum (1 million oz deficit) had been met by Above ground stocks.

• Platinum deficit has been triggered by the slowdown of BEV (Battery Electric Vehicle) adoption which meant steadiness in gasoline automobile demand and also substitution of Palladium with Platinum in gasoline engine production for reduction of harmful emissions owing to the price imbalance between Platinum and Palladium.

• The effect on supply of Palladium due to the announcement of sanctions against Russia which contributes to 29% of the supply.

• Overall, Palladium experienced volatility given 80% of Palladium usage is in automobile gasoline engine making, and there is shift happening on two fronts – shift towards Battery EVs which however has slowed down, the shift to Platinum in gasoline engine production due to price favorability. 

The context 

The uncertainty due to Global wars, dovish stance and interest cuts by Central Banks in major economies to propel industrial activity resulted in Gold running a very good rally throughout 2024. Over the decade prior to the onset of COVID, a lot of literature has been written across publications and over the Internet hailing Gold as a safe haven asset with well researched articles providing data based evidence of how much Gold has been the sought after metal by Central Banks as well as households as a carrier of value particularly during turbulent times. Over this backdrop, Gold has been recognized as a mainstream investment by institutional investors and its narrative as a safe haven asset has been solidified in the minds of all strata of investors. 

Silver is sitting pretty as it carries the dual role. One of acting as a hedge against inflation, global tensions, and the other of an industrial commodity. The usage of Silver in the industrial world also is in key disrupting areas such as Artificial Intelligence (AI), 5G, Solar panels and such. Given it is a byproduct of mining done for other metals like zinc, copper, lead etc, the supply of Silver is not in a position to catch up with the demand which can act as a propeller of its prices. There are enough Investment pundits, advisers who are actively predicting a Silver surge continued from 2024. 

When it comes to Platinum and Palladium, the context is slightly different. From the industrial demand perspective, they have been going through a rollercoaster for the past few years. While both the metals find high usage in automobiles in their usage as catalytic converters to reduce harmful emissions in Internal Combustion Engines (ICEs) - Palladium primarily in gasoline engines / petrol cars and Platinum primarily in diesel engines, the emphasis on BEVs (Battery Electric Vehicles) had put a question on the continued relevance of these metals since 2017. However, there were signs of slowing down of growth in BEV sales in some major countries and the adoption of Hybrid vehicles that maintained steady demand for Palladium and Platinum. The promise of Hydrogen Economy, FCEVs (Fuel Cell Electric Vehicles) that run on hydrogen, where Platinum is a crucial catalyst in the Proton Exchange Membrane (PEM) fuel cells, has been the long term bet on the revival of Platinum demand. Other than the above factors, the saturation of Platinum jewelry market across major countries has been a cause of concern. 

Amidst this context, Platinum still has had demand exceeding the supply from its mines. However, Above-ground stocks helped sustain the prices of Platinum. 

2025 – What to expect 

Gold 

The nationalistic nature of the new US president’s fiscal policy direction is adding tension to the global equilibrium which can be a catalyst to continue the rally of Gold. While there is a chance of global wars reaching a conclusion in 2025, the tariff and trade wars anticipated are expected to keep the investors on the edge of their seats. How this equilibrium shift will effect Gold prices is anybody’s guess, but most commentators are predicting a continued bullish trend. Populistic measures that can lead to fiscal deficit weakening US dollar can further support this direction. Other major currencies are facing threat of devaluation and this can keep the momentum of Central Bank purchases of Gold reserves. A few shocks and surprises can halt the momentum once in a while, but December 2024 had shown that Gold continues to maintain its reputation of stability in such scenarios. In all, international commentators are predicting that Gold will continue to be a safe bet and in fact has the potential to continue giving good returns. 

Silver 

A Silver surge is actively being predicted by some pundits. This is backed by the industrial usage of Silver in the AI boom, 5G industry, although the solar energy production faces some uncertainties due to the not so favorable stance by the US. The factors that can lead to Gold bull rally have the potential to rub on Silver as well. However, historically Silver had proven to be more volatile than Gold given the comparitively smaller market of Silver is prone to shocks that can effect the industries that consume Silver. 

Platinum 

The overall prediction of Platinum for 2025 is very similar to 2024, that it will mostly be range bound. Investors with long term bets on Platinum must watch the progress of Hydrogen Economy and Fuel Cell EVs. The overall narrative on Platinum remains that its price probably has bottomed out and supply deficit and shift from Palladium to Platinum is going to support the metal’s price despite a gradual shift of automobile industry towards BEVs. A long term view is favorable given the supply deficit, support from currency devaluation and promise of Hydrogen economy. 

Palladium 

In the short term, a shift in narrative towards Russia from the fresh US administration, a possibility of cease fire of Russia-Ukraine war, and reduction of sanctions on Russia, can have a positive impact on Palladium’s price. Palladium’s dependence on gasoline engine market which is gradually paving way to Battery EVs puts the future of Palladium at a question. 

What it means to the Indian investors? 

Indian investors are advised to choose their asset allocation as per their risk tolerance and investment goals. 

If you are someone who keeps most of your investments in Real Estate, cash, bank deposits, Fixed Deposits (FDs), Recurring Deposits (RDs) and some of it in gold, it is advised to assess how much of your investments should be in Gold, familiarize yourself with Silver investments and invest in digital gold or silver accordingly. 

If you have your investments mostly in equity / shares, you might want to re-assess your risk tolerance and the impact of market shocks, currency depreciation on your portfolio and allocate some weightage to Gold / Silver. Investment in digital gold / silver can provide the much needed cushion to your investments against market shocks and currency depreciation. 

If you are bullish on specific industries such as Artificial Intelligence (AI), 5G, Solar Energy, Hybrid Electric Vehicles, Hydrogen Energy / Fuel Cell Electric Vehicles, you can consider spreading a portion of your investments across Silver, Platinum, Palladium after doing research on the specific metals.