Saxo Bank analysts highlighted that the precious metals market has undergone significant transformations in recent years, driven by evolving supply-demand dynamics for gold, silver, and platinum, alongside geopolitical developments and industrial expansion. Nevertheless, these metals continue to serve strategic functions within investment portfolios.
Gold: The Benchmark Safe-Haven Asset
According to the bank, gold remains the primary benchmark among safe-haven assets, thanks to its historical monetary role and its ability to preserve value during periods of financial turmoil.
The report noted that gold "is not consumed like other commodities and does not lose its value—it is stored." This makes it distinct from other assets. While most commodities are driven by industrial use, gold primarily retains its monetary function.
Central banks around the world currently hold more than 36,700 tonnes of gold, representing about 17% of all the gold ever mined. The United States, Germany, and China top the list of holders. These reserves, according to the bank, reflect nations’ efforts to diversify reserves and protect against currency volatility or geopolitical shocks.
The analysts emphasized that gold performs strongly "when real interest rates are low or negative, when fiat currencies come under pressure, or during periods of heavy market selloffs."
However, they cautioned against viewing gold as a growth asset, noting that it does not generate income. "Its price is driven more by market sentiment, real yields, and dollar strength than by traditional supply and demand fundamentals."
Silver: A Balance Between Value and Industrial Future
Silver holds a dual role—as a store of value and as an industrial commodity—which gives it unique flexibility among precious metals, although it tends to be more volatile than gold.
Over 50% of global silver supply is used in industrial applications, especially in solar energy and clean technologies. This industrial demand makes it a less reliable safe haven compared to gold, but more responsive to economic growth cycles.
According to the bank, "Silver tends to perform well when inflation is driven by industrial growth, but lags during downturns in industrial demand." Its relatively low price also makes it an attractive choice for retail investors, while ETFs and futures remain suitable vehicles for institutional exposure.
Platinum: An Industrial Metal at Its Core
Platinum stands out for its scarcity and vital industrial uses. It is primarily mined in South Africa and Russia, making it susceptible to geopolitical risks. About 40% of global platinum demand comes from the automotive sector, particularly catalytic converters in gasoline engines. It is also used in oil refining, medical equipment, and emerging hydrogen fuel cell technologies.
Still, demand in these applications "remains below expectations," Saxo Bank noted.
The platinum market faces structural challenges, including a projected supply deficit of 848,000 ounces in 2025 due to declining production and recycling. Prices are also affected by substitution trends between platinum and palladium in the automotive industry.
Despite this, platinum remains a "speculative" option for investors seeking opportunities in industrial commodities tied to technology and shifting market balances.
Benefits and Risks of Investing in Precious Metals
Advantages include: Portfolio diversification,Inflation hedging,No counterparty risk,High liquidity and accessibility and Easy storage and portability
Drawbacks include: Lack of periodic income ,Price volatility ,Storage and insurance costs ,Potential tax implications and Behavioral risks from short-term trading
How Much Should Individuals Invest?
Saxo Bank recommends allocating 2% to 5% of a conservative investor’s portfolio to precious metals, with a focus on gold. This allocation can rise to 10% for balanced or inflation-sensitive portfolios—especially during periods of monetary instability or currency devaluation.
"Gold, silver, and platinum remain relevant—not because they respond to every market swing, but because they behave differently when it truly matters," the analysts concluded.
"Gold provides stability when real rates fall, silver reflects industrial inflation, and platinum captures shifts in industrial supply and demand."
Follow the latest news on Google News
