Among the four precious metals, platinum is often overlooked even though it’s generally in close price parity to gold. This is because platinum is rarer, lacks gold’s unique properties that make it the easiest metal to work with, and thus has a much small global market.
Nonetheless, it’s also a highly useful industrial metal. Its fortunes are closely aligned with automobile sales, as platinum (and palladium) are key inputs for the devices that reduce exhaust pollutants, catalytic converters. Heavy investment in catalytic converters and similar technology, especially by pullution-riddled China, are a growing source of demand for platinum in industry.
Since reducing emissions is such a growing concern—and a source of considerable costs for the auto industry—there are always new technologies using platinum or even gold that seek to improve the process. The government of Zimbabwe has enthusiastically embraced a new platinum refining technology that will purportedly make production of the valuable metal more efficient.
Prices for platinum have been fairly quiet lately, although the trend has been downward since the beginning of the second quarter this year. The precious metal has seen its spread with close cousin palladium narrow significantly. In the past, the ratio is usually well over 2:1, but with platinum currently shy of $1,000/oz, palladium’s rise to roughly $800/oz is a historically small gap.
The CEO of multinational miner Anglo American Platinum (widely known as Amplats) was recently quoted saying that there could be platinum mine closures if prices continue to fall. This would subsequently support higher prices if major producers are not adding to the global supply. A similar dynamic boosted platinum prices a few years ago when persistent strikes at South African platinum mines stalled output for months.
As innovations related to the refining and mining of platinum continue to appear, new platinum investment products are likewise showing up up the market.
For years, there was speculation about and proposals for a platinum coin in South Africa bearing the former president Nelson Mandela’s image. The idea has never been approved despite a fair amount of interest in platinum bullion coins from investors. (South Africa accounts for nearly 70% of the world’s annual platinum supply.) However, South Africa did introduced a platinum version of its popular Krugerrand for 2017.
In the U.K., the Royal Mint similarly chose 2017 to introduce its first-ever platinum bullion product. These will be extra-pure (.9999 fine) platinum coins that bear the fantastic first “Queen’s Beast” design (shown below) that appears on other Royal Mint bullion products. It will also begin offering platinum bars as well as opening its own platinum trading platform. You can check out the press release from December about the mint’s expansion into the platinum market.
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.