Platinum

Overview

On the 27th October 2008 the price of spot Platinum traded at $803.33 per troy ounce. On the 22nd August 2011 the price of spot Platinum traded at $1,854.20 per troy ounce – an increase of over 100% in less than 3 years between these two time periods. It sometimes occurs in Nickel and Copper Ore that is mined; as well as being one of the rarest metals to be found in our earth’s crust.

Significant demand for Platinum Group Metals (PGMs) comes from the automotive industry, and, these metals are key to components within vehicles. Platinum can also be vulnerable to supply disruptions; an example of this would be the recent Russian supply disruptions that appreciated an oz. of platinum considerably.

Platinum has also being used, like Gold to hedge against economic uncertainties and the risk of inflation, as well as diversifying an investor’s portfolio away from definite main stream precious metal purchases such as gold and silver that investors like to purchase due to tighter spreads and more competitive pricing.

South Africa equates for over 80% of the world productions of Platinum; this has lead to volatility within the price of platinum as supply has been effected due to southern African worker interferences .

According to Johnson Matthey, a reputable trade and research house, the Platinum market is to remain in deficit in 2013 as demand for the group metal outstripped supply.

EVR Bullion offers live market intelligence and research analysis for the Physical OTC Platinum market for active trading clients.

Add it all up and the message is clear: by any reasonable measure, the supply problems for the PGM market cannot be fixed in the foreseeable future. We have a rare opportunity to invest in metals that are at the beginning of a potential 10-year bull run. We, thus, wouldn’t wait to start building a position in PGMs.

GFMS, a reputable independent precious metals consultancy, predicted earlier this year that the palladium price will hit $930 by year-end and that platinum will go as high as $1,700. But that will just be the beginning; the forces outlined above could easily push prices to double over the next few years.

At that point, stranded supplies might start coming back online—but not until after major, sustained price increases make it possible.

Like gold and silver, platinum is traded around the clock on global commodities markets. It tends to fetch a higher price than gold during routine periods of market and political stability, simply because it’s much rarer; far less of the metal is actually pulled from the ground annually. Other factors that determine platinum’s price include:

Like silver, platinum is considered an industrial metal. The greatest demand for platinum comes from automotive catalysts, which are used to reduce the harmfulness of emissions. After this, jewelry accounts for the majority of demand. Petroleum and chemical refining catalysts and the computer industry use up the rest.

Because of the auto industry’s heavy reliance on the metal, platinum prices are determined in large part by auto sales and production numbers. “Clean air” legislation could require automakers to install more catalytic converters, increasing demand, but in 2009, American and Japanese car makers were turning to recycled auto catalysts, or using more of platinum’s reliable (and usually less expensive) sister group metal, palladium.

Platinum mines are heavily concentrated in only two countries: South Africa and Russia. This creates greater potential for cartel-like action that would support, or even artificially raise, platinum prices.