With so much of the focus in the precious metals markets homing in on gold and silver (and deservedly so), the Platinum Group Metals (PGMs) have gotten lost in the shuffle. As a result, both the palladium and platinum price were lagging behind their better-known cousins so far in 2016. This trend has finally begun to turn as the broader market for investment-grade precious metals continues to push higher.
Fresh Highs for Platinum Price
Spot platinum is trading above $1,080/oz on Monday morning for the first time since early July of 2015. The metal really began to rally in earnest throughout April, advancing just over 14% from trough to peak over the course of the month. This somewhat belated surge resembles the fantastic gains that silver prices posted in April and gold prices showed during the first quarter. Incredibly, from its low in late January through today, the platinum price has advanced a mind-boggling 32%.
Until recently, about the only good news for platinum over the past year or so was the emissions scandal for Volkswagen regarding its cars with diesel engines. Platinum and palladium are key components in catalytic converters for automobiles to help scrub exhaust emissions. In diesel vehicles, even more of the high-cost platinum is used. The recall of millions of VW cars—and, presumably, the use of more platinum to shore up their lacking emissions standards—was supportive of a stronger platinum price, although the impact turned out to be rather modest.
By comparison, palladium has been more of a slow-mover. While still relatively below its historical proportion to the platinum price (currently 1.7-to-1), keep in mind that spot palladium sank as low as $470/oz in January. At $630/oz, palladium is now 34% higher than these year-to-date lows. However, the metal was more recently above these trading levels in early November.
In general both of the PGMs are seeing greater strength against gold. (This is often used as a measuring stick of sorts for how comparatively overbought or oversold the respective commodities are.) This is certainly aided by the renewed rally for the yellow metal in the wake of a softer interest-rate outlook from the Federal Reserve. Spot gold rallied near $1,300/oz for the first time in 16 months on Monday.
Science May Boost Platinum Mining
In an unexpected turn, natural science may have discovered a new way of finding platinum deposits. Generally, PGMs are isolated to large ore deposits (predominantly in South Africa and Russia) and are rarely found in soil and sediment.
However, a group of researchers with a decade of experience studying gold and other precious metals have uncovered an interesting relationship between platinum and, of all things, bacteria!
According to Mining.com, these Australia-based scientists “linked specialized bacterial communities, found in biofilms on the grains of platinum group minerals at three separate locations around the world.” They’ve actually “shown [that] . . . the entire process of formation of platinum and palladium was mediated by microbes.”
The implications of this research could help miners decide where to look for platinum and palladium deposits based on the presence of these microbes.
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.