Marc Desormeaux, a senior economist for Scotiabank, has said that his company is bullish on precious metals as it expands its positive forecasts for this year. But he added that they predict silver will  outperform gold.

Looking at growth in 2021, Scotiabank says it predicts the global economy will expand by 5.6% and 4.4% in 2022. They also see the American economy growing by 5.8% this year and 4.3% in 2022.

But Desormeaux said this growth would come with a cost.

“A withdrawal from emergency conditions and the potential of a stimulus-backed recovery is feeding inflation predictions and devaluing the dollar, supporting metals—especially silver,” he wrote in his report.

Precious metals are supported by rising inflation, and improving economic activity is expected to take some of the demand out of the U.S. dollar as a safe-haven.

The comments come as the U.S. dollar has fallen to a two-month low below 90 points.

“We expect the dollar to keep depreciating as economic conditions improve, which should bolster commodities which are priced in the world’s reserve currency,” said Desormeaux.

Looking at gold, Desormeaux says his company sees prices keeping steady for the rest of 2021, averaging about $1,850 per ounce. But he took note that this was the highest average price on record.

“Rock-bottom interest and the Fed’s allowance for inflation continue to underpin prices for inflation hedging. Though the metal is lower incrementally versus January, it stays at historically high levels,” he said.

Desormeaux also said that silver’s popularity this year could be another factor in gold’s lacking performance. Looking ahead, he said they expect silver to continue to do very well.

“Given the same inflation hedge drivers, silver also has many industrial uses—making it a very hot asset as stimulus payments ramp up,” he said.

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