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Precious Metals Market Expected to Top $400 Billion in Next Five Years

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The global precious metals market is on pace to top $400 billion within the next five years.

According to Fortune Business Insights, an India-based consultancy company, the precious metals market is on pace to hit $403.1 billion by 2028, driven primarily by the gold market. This is up from $275 billion in 2021.

The projected compound annual growth rate (CAGR) for the precious metals market is 5.6%.

The report specifically pointed out the relatively low risk in precious metals investments.

The increasing investments in a commodity such as gold due to its low-risk factor compared to other investments such as equities, bonds, or real estate are fueling the market. Moreover, gold, silver, and platinum are the most preferred metals to produce jewelry due to their luster and malleability. Therefore, the increasing demand for jewelry from consumers is resulting in market growth.”

Gold investment demand is expected to be the primary driver of market growth. According to the report, “The increasing investments in a commodity such as gold due to its low-risk factor compared to other investments are augmenting the segment growth.”

We saw investment in physical gold drive overall gold demand to an 11-year high in 2022. Investment demand totaled 1,107 tons last year, a 10% increase year-on-year.

Gold bar and gold coin demand grew by 2%, building on strong demand in 2021. In total, global investors bought 1, 217 tons of gold bars and coins, with the second half of the year particularly strong, charting two successive quarters of demand of around 340 tons for the first time since 2013. According to the WGC, “The need for wealth protection in the global inflationary environment remained a primary motive for gold investment purchases.”

Investors in the West had a particularly strong appetite for gold and broke an annual record. Combined US and European purchases of gold bars and coins hit 427 tons. That exceeded the previous record of 416 tons set in 2011.

The report also pointed out that the green energy drive will continue to push silver demand higher.

The use of silver in the electrical & electronics industry, as stated by Silver Institute, accounted for 10.2% of the total silver demand in 2020 as silver is used in solar panels to conduct electricity with the highest efficiency. These factors are expected to drive the precious metals market growth.”

In fact, the growing demand for silver in the solar power industry will likely put a significant squeeze on supply in the coming years, and the current price of silver does not reflect the likely shortages. According to a research paper by scientists at the University of New South Wales, solar manufacturers will likely require over 20% of the current annual silver supply by 2027. And by 2050, solar panel production will use approximately 85–98% of the current global silver reserves.

The use of platinum and palladium in the automotive industry will also boost overall precious metals demand, according to the report. The platinum sector held the largest market share, making up 26.1% of the precious metals market in 2020.

This is attributable to its increased demand in the auto-catalysts application. Moreover, platinum has the ability to capture carbon and other harmful emissions. Therefore, industries are increasingly using platinum group metals to curb pollution. … The growing demand for metals from end-users such as automotive and electrical & electronics is increasing the demand for valuable metals. The automotive industry uses platinum and palladium metals in catalytic converters. Additionally, governments worldwide have become more aware of the climate crisis, therefore to meet the substandard of carbon emissions, vehicles have boosted the demand for platinum.”

Growing global demand for jewelry boosted by increasing economic prosperity will also help boost demand for gold, silver and platinum over the next five years, according to the report.

Increasing disposable incomes and changing lifestyle choices are a few of the factors driving the market. The demand for these metals is estimated to propel globally for jewelry, and investment applications as gold and silver are of prime importance in wedding ceremonies of Southeast Asian countries. Therefore, the rising population and increasing spending capacity of consumers in the region will contribute to market growth.”

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About The Author

Michael Maharrey is the managing editor of the SchiffGold blog, and the host of the Friday Gold Wrap Podcast and It's Your Dime interview series.
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