Swiss investment bank UBS has announced that it expects silver to outperform gold in 2021, following a year which saw “safe haven” precious metals hit record highs and reap the benefits of global stock market volatility.

2020 was a remarkable year for gold, which surged to a record high of $2,075 in August after one of its longest price rallies in history. With pessimism weighing down equities around the world as a result of the Covid-19 pandemic, investors increasingly looked to gold – which usually, but not always, appreciates in value during periods of economic turbulence – to balance their books.

Now, as gold extends a month-long dip in value, strategists at UBS’s Global Wealth Management team have warned that they do not expect the precious metal to repeat its 2020 arc, but that silver is ripe for its chance to shine – and may well outperform gold entirely.

As the economy gradually improves in 2021, UBS predicts that increased industrial demand will support silver prices, especially considering a greater focus from policymakers on renewable energy and decarbonisation efforts in 2021. According to UBS, more than 50% of silver used in industrial applications is linked to solar panels and electronics, both of which are crucial for the trend towards green technology.

The UBS strategists expect silver prices to reach $30 per ounce by the end of the first quarter and eventually level off to $27 per ounce by the end of 2021. It is is currently trading at around $25 per ounce.

Meanwhile, UBS expects that gold will struggle to attract “sufficient” ETF inflows to sustain prices above $1,900, with the firm estimating the asset will finish 2021 2.5% lower than current levels, at $1,800 per ounce.

UBS added that ongoing dollar weakness and low real interest rates will keep all precious metals prices elevated in the first quarter of 2021, but that gold will weaken in the second quarter as the macroeconomic backdrop improves and the Federal Reserve – as well as the Bank of England – begin to taper their quantitative easing programmes.

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Junior Journalist at the UK Investor Magazine. Focuses primarily on finance and business content. Has personal interests in Middle Eastern politics, human rights issues, and sustainability initiatives.