Over the course of the bear market that tore through the commodities cycle from 2012-2014, one of the biggest losers was the price of platinum. The lesser-known precious metal that doubles as an important industrial resource reached its nadir of just above $800 per ounce during late 2015 and early 2016. This bottom of the canyon is a far cry from platinum’s days trading well above $2,000/oz in the tumultuous spring of 2008.
However, the metal is often more volatile than it’s cousin gold. By the end of 2008, its spot price was more than 60% off of these intra-year highs! It then rallied back above $1,800/oz by the middle of 2011.
The metal is actually up north of 29% from its January lows in 2016; however, it’s also true that prices have lost roughly 45% over the preceding two years—when it had traded as high as $1,500/oz in the summer of 2014.
Although its price level is generally not far off of gold’s (either slightly above or, as is currently the case, slightly below), there is a compelling argument that platinum in many ways resembles silver in that it is equal parts industrial commodity and scarce investment asset.
A pair of developments so far in 2016 are perhaps lending support to the investment side of this equation.
World Platinum Investment Council (WPIC)
Through a partnership with the world-famous Swiss refiner Valcambi Suisse, the WPIC is aiming to make investment-grade platinum products such as government-issued bullion coins and privately minted bars more readily available on the global markets. Especially compared to the silver and gold markets around the world, the range and reach of the platinum market is still rather limited. This is due both to the focus on its industrial uses (particularly in automobile manufacture) and the fact that the metal is only mined on a large scale in a relatively few locations around the planet.
Many dealers simply don’t stock much platinum that could be used for investment purposes because these products are less widely available. For instance, the American Platinum Eagle coin is usually minted in rather low numbers most years (if it is minted at all). To ease the effect of this roadblock, Valcambi plans to mint its own platinum bullion in weights ranging from as little as 1 gram to as large as a kilogram. The latter would likely sell in the neighborhood of $34,000 per bar.
New Platinum Philharmonic
Along the same lines, the Münze Österreich (Austrian Mint) introduced a Platinum Philharmonic coin for first time in February. Austria’s series of Gold Philharmonic and Silver Philharmonic coins are the most popular of their kind in Europe and enjoy considerable demand overseas as well. The move is seen as another credible expansion of the range of products available for investors who are interested in adding platinum to their portfolio. Like most investment-grade platinum, these legal tender coins will be 99.95% pure.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.