Precious Metals Market Overview
The CAGR for the precious metals industry is projected to be 8% by 2027. The precious metals market value is expected to be USD 362.1 billion by 2027.
Precious metals include gold, silver, and platinum. They tend to be rare Earth metals in quantity. These metals have unique and valuable properties. The properties are not easily found in other more common base metals like iron, lead, and aluminum.
Precious metals are excellent conductors of electricity. That’s why they’re used in the wiring of electronic devices. They have high melting points, they don’t rust or corrode easily. Also, they are not magnetic. It’s these rare qualities that make them highly sought after, and hence, valuable.
Metals like gold, silver, rhodium, and platinum shine with brilliance that base metals don’t. They also mix easily with other metals and make stronger and more durable alloys. Pure base metals tend to be very soft and easily pliable. These are other qualities that make them very popular.
COVID-19 is a dangerous virus that is shaping the nature of the world, the course of world history, and its destiny. It’s somewhat contagious, it can make some people extremely ill, and it can leave those who recover from it with long-term and serious health problems like diabetes and shortness of breath for life.
Governments realized this early on. That’s why they sought to impose mandatory lockdowns and quarantines to try to control the spread of the virus. These were short-lived since they were not very effective. However, the impact on many companies in almost all industries was far from short-term. Most of these companies were negatively affected, both in terms of production and profitability, because they were forced to either stop their operations temporarily or scale them back drastically.
The companies in the precious metals industry experienced the exact opposite fate. Demand for these metals increased as did investments in them. The reason being that these metals have historically been stable in price and are not as sensitive or responsive to major changes in the world economy. Therefore, they became a safe vehicle for companies, governments, and wealthy individuals to invest in.
The precious metals industry is highly fragmented and competitive. The reason being that there are many companies in the industry and many more that want to enter. There are relatively few barriers to entry, the industry is lucrative, and growth opportunities are plentiful. These are just some of the factors that are enticing companies to enter.
Companies are finding that they must resort to research and development to come up with better extraction and refining processes that will allow them to develop and market better products. Incidentally, this will also help them create a valuable sustainable competitive advantage.
These companies are finding that entering into strategic partnerships with other successful companies also helps them stay competitive. The same is true when they merge with/acquire other successful companies. The resulting companies have more resources that allow them to do better research and development and marketing. They’re able to make much more money and create a sustainable competitive advantage this way.
Hycroft Mining Corporation is a major American player in the precious metals industry. It has become a key industry leader by investing heavily in research and development. This allowed it to create the sustainable competitive advantage that it needed to become successful.
List of companies
- Hycroft Mining Corporation (US),
- Anglo American (UK),
- Barrick Gold Corporation (Canada),
- Freeport-McMoRan (US),
- GOLDCORP INC. (Canada),
- Kinross Gold Corporation (Canada),
- Lonmin Plc (South Africa),
- Newmont Mining Corporation. (US),
- Russian Platinum (Russia),
- Norilsk Nickel (Russia),
- PAN AMERICAN SILVER. (Canada),
- Asahi Refining (US), and
- Sumitomo Metal Mining Co., Ltd. (Japan)
Inflation is rearing its ugly head in most nations around the world because of the economic fallout of COVID-19 and the dramatically increased government spending that is resulting. This, combined with the uncertain economic future that COVID-19 is creating has driven the demand, and hence investment, up for precious metals.
Automobile sales are on the rise, especially in developing nations. This is driving the demand for palladium and platinum since these are used in catalytic converters in motor vehicles. Another important factor driving growth is the fact that jewelry is much more in demand in the rapidly industrializing Asia-Pacific region.
India and China currently have some of the world’s fastest-growing economies. Fast economic growth in these two economies translates into an increase in demand for various products that use precious metals like jewelry and electronics. Many processors in the precious metals industry are responding by developing processes that will make precious metals more durable and improve their already excellent qualities.
What’s holding back precious metals market growth is the fact that though relatively stable, the prices of precious metals are still subject to violent and regular price fluctuations. Also, it’s not always easy to mine these metals. Another key factor is that precious metals decline in quality as more of them are mined from the same source.
A key challenge that the precious metals industry faces lies in conforming to the stricter government rules and regulations that will be placed on it in the future.
Cumulative growth analysis
The CAGR for the precious metals industry is projected to be 8% by 2027. The precious metals market value is expected to be USD 362.1 billion in 2027.
Anglo American is a major British player in the precious metals industry. It has managed to retain a superior position and become an industry leader by investing heavily in research and development. This allowed it to develop a new set of processes for processing heavy metals further. The result was a better product. Anglo American has, hence, been able to develop a sustainable competitive advantage.
The precious metals industry can be grouped into the following sub-segments by type:
The platinum sub-segment can be further divided into platinum, palladium, ruthenium, rhodium, osmium, and iridium.
The precious metals industry can be grouped into the following sub-segments by application:
- Computer parts
The precious metals industry can be grouped into the following sub-segments by end-user:
- Oil and gas
The precious metals industry can be grouped into the following regions:
- North America
- The European Union
- Latin America
- The Middle East and North Africa
There is an extremely high demand for precious metals like gold and silver for use in jewelry and as investment instruments in most Asian nations. That’s why the Asia-Pacific region had the greatest precious metals market share in 2017. China, in particular, produced and used the most gold out of all of the nations in the region. Production and consumption activity occurred mostly in the form of gold bullion and coins. What’s accounting for this is the fact that average discretionary income is rising dramatically as is investment activity.
Australia, Japan, New Zealand, and Singapore also consume, produce, and invest in large amounts of precious metals.
The North American region is expected to experience a high precious metals market growth rate. It’s largely attributed to increased mining operations, better refining, and processing methods, and increased growth in the electronics industry (which relies on the silver to operate well!) The United States of America and Canada are the key nations in North America mainly because they have the largest concentration of precious metal mining companies.
The European Union had a respectable precious metals market share. The entire region is expected to post healthy precious metals market growth rates because its nations are investing in better mining technologies and because the refining processes are improving dramatically there. The automotive industry is growing across Europe and this is boosting the demand for precious metals.
The precious metals market growth rate is highest in Russia because demand for platinum is at an all-time high. Platinum is used in machines that control pollution in motor vehicles and dental equipment.
Latin America is experiencing phenomenal precious metals market growth mainly because these nations have a large concentration of precious metals mines. The electronics industry is growing rapidly in this region and this is fueling demand for many precious metals. This is especially true in Brazil, Mexico, and Argentina.
The Middle East and North Africa have many companies that mine precious metals. These nations are also investing heavily in better research and development methods.
January 2022: Dignity Corp., announced its listing on CryptoSX, a well-established US-based digital security that is pioneering a new approach by backing a security token with gold reserves, announces the acquisition of an additional USD 20 billion in gold, silver, platinum, and rare earth element mining reserves, as well as mill processing operations. According to the most recent NI 43-101 study, the agreement will secure a measured resource of above-ground tailings and a measured resource of below-ground minable gold, silver, platinum, and rare earth elements valued at a combined USD 19.3 billion.
Anglo American enters into a strategic partnership to develop cleaner steel
The CAGR for the global precious metals industry is 8%. The precious metals market value is projected to be USD 362.1 billion by 2027. The Asia-Pacific region has the highest market share but the North American region has the highest CAGR.