Best of the Week
Most Popular
1.London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - Nadeem_Walayat
2. Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - Michael_Noonan
3.Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - Nadeem_Walayat
4.Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - Jim_Willie_CB
5.Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - Keith Markey
6.Gold Prices 2014: Do What Goldman Does, Not What It Says - David Zeiler
7.Bitcoin Price Strong Appreciation to Be Followed by Declines? - Mike_McAra
8.Gold Preparing to Launch as U.S. Dollar Drops to Key Support - Jason_Hamlin
9.Doctor Doom on the Fiat Money Empire Coming Financial Crisis - Andrew_McKillop
10.The Real Purpose Of QE - It’s Not Employment - Darryl_R_Schoon
Last 72 Hrs
Tesco Profits Panic! Back to Back £5 Off £40 Shop Voucher Promotions - 18th Apr 14
The Obama Game - Is Putin Being Lured Into a Trap? - 18th Apr 14
The Growing Threat to Capitalism - 18th Apr 14
Build Biotech Wealth on Solid Platforms - 18th Apr 14
Has Solar Power Finally Arrived? - 18th Apr 14
Bank Depositor Bail-Ins and Real Assets vs Liability-Based Assets - 18th Apr 14
10 Ways to Screw up Your Retirement - 17th Apr 14
One of Harry Dent’s Three Keys to Market Prediction is Cycles - 17th Apr 14
Obamacare Proof Stocks - 17th Apr 14
Gold, Silver And The Mining Sector: Prepare For A Severe Fall - 17th Apr 14
Hidden Australian Life Sciences Bio-tech Growth Stocks - 17th Apr 14
Disrupting Big Data Status Quo - 17th Apr 14
What the Stock Market Bears Have Been Waiting for... - 17th Apr 14
Copper Is Pathological and Suffers from SAD, but It Has Value - 17th Apr 14
Old World Order New World Order, Chaos And Change - 17th Apr 14
Even The US Government Will Abandon the U.S. Dollar - 17th Apr 14
Gold - Coming Super Bubble - 17th Apr 14
Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - 16th Apr 14
High-Frequency Insider Trading - 16th Apr 14
Gold Prices 2014: Do What Goldman Does, Not What It Says - 16th Apr 14
These CEOs Will Make Investors Rich - 16th Apr 14
Climate Change, Central Banking And The Faustian Bargain - 16th Apr 14
Every Central Bank for Itself - 16th Apr 14
Social Security, U.S. Treasury Stealing Every Last Penny From Americans - 16th Apr 14
Ukraine Falling to Economic Warfare and Its Own Missteps - 16th Apr 14
Silver and Gold Miners Still Disappoint - 16th Apr 14
Silver, Gold, and What Could Go Wrong - 15th Apr 14
How I Intend to Survive the Meltdown of America - 15th Apr 14
France Wakes Up To The Multicultural Multi-Threat - 15th Apr 14
The Real Purpose Of QE - It’s Not Employment - 15th Apr 14
Peak Coal - 15th Apr 14
Flash Crash, Rigged Markets - What’s the Frequency Zenith? - 15th Apr 14
Forecasting U.S. GDP Growth: A Look at WSJ Economists’ Collective Crystal Ball - 15th Apr 14
Stock Market - Is Something Nasty About to Happen? - 15th Apr 14
How to Trade Your Way To Freedom - 15th Apr 14
Understanding (and Ignoring) the Media Bandwagon Against Gold - 15th Apr 14
When Stock Market Bubble Crashes, Take Refuge in Gold Stocks - 15th Apr 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Why You Can Bet on Platinum Prices Going Higher

Commodities / Platinum Feb 20, 2013 - 04:24 PM GMT

By: Money_Morning

Commodities

Jeff Uscher writes: Platinum prices, which have been below gold prices since mid-2011, are once again higher than the yellow metal, and the spread's widening.

Platinum was trading around $1,674 an ounce Friday, while gold was down around $1,605.


Platinum prices have been climbing since the start of the year as industrial activity and automobile production have picked up in the U.S. and in China.

The white metal has also been given a boost by new restrictions on platinum ore exports by the government of Zimbabwe and the closure of several mines in South Africa.

With production down and demand rising, many analysts expect platinum prices to continue to rise.

Gold, on the other hand, continues to consolidate after hitting an all-time high in the fall of 2011.

Historically, platinum has usually traded at a small premium to gold. For most of the period from 2000 until the financial crisis of 2008, platinum traded at a premium of 50% to 100% over gold, occasionally spiking even higher.

However, as platinum and other platinum group metals (palladium and rhodium) became widely used in catalytic converters, demand for these metals has skyrocketed and so have prices.

This makes now a good time to be investing in platinum.

Demand for Platinum Group Metals
The resurgence of car and truck demand in the United States and China has increased demand for platinum group metals for use in catalytic converters.

According to Johnson Matthey, a leading refiner of precious metals, industrial uses excluding catalytic converters make up about 30% of total platinum demand. Catalytic converters for the auto industry use 33% of the world's platinum while jewelry accounts for 29%. The remaining 8% is made up of platinum coins, bars and ingots used for investment purposes.

Demand is particularly strong in China, where air pollution has gotten so severe that it has finally gotten the attention of the State Council, China's highest political authority.

The South China Morning Post reports the Chinese government is pressuring state-owned oil refiners to refine and distribute gasoline and diesel fuel that meet strict emissions standards.

High-temperature gasoline engine exhaust allows the use of cheaper palladium in catalytic converters. Diesel engines burn a lot cooler. Only expensive platinum will work in diesel catalytic converters.

As China begins to replace its aging fleet of high-emission diesel trucks with low-emission trucks designed to burn the new, low-emission fuels, platinum demand will rise.

But China is not the only market where demand for diesel engines could increase.

Diesel engine cars and light trucks are slowly becoming more popular in the United States because of high fuel prices and diesel's greater fuel efficiency.

General Motors Co. (NYSE: GM) introduced a diesel-powered Cruze at the Chicago Auto Show last week and Chrysler has introduced a diesel Jeep. And one in five cars sold by Volkswagen AG (VLKAY) in the U.S. has a diesel engine.

All of this boosts demand for platinum.

Supply-Side Worries Affecting Platinum Prices
South Africa, Russia and Zimbabwe are the world's three largest suppliers of platinum group metals.

Strikes and other labor unrest by miners in South Africa and higher taxation by the government have caused the largest platinum miner, Anglo American Platinum (AGPPY), to close some of its South African mines.

In neighboring Zimbabwe, the government has banned the export of platinum ore and has given miners there two years to build platinum refineries in an effort to boost the value added to platinum exports.

On Wednesday, the government expropriated land owned by Zimplats, the biggest platinum miner in Zimbabwe, which may affect the company's expansion plans.

Investing in Platinum
Fortunately, there are some alternatives for investors looking to own platinum.

The ETFS Physical Platinum Shares (NYSE: PPLT) offers a way for investors to own physical platinum without actually taking possession of the metal. For those interested in palladium, the ETFS Physical Palladium Shares (NYSE: PALL) makes a good alternative.

Stillwater Mining Company (NYSE: SWC) mines platinum group metals, including platinum and palladium, at its mine in Montana. The company also mines platinum group metals in Ontario, Canada, and has other mining properties in Argentina.

Impala Platinum Holdings (IMPUY) also trades in the U.S. but it is the operator of Zimplats in Zimbabwe and should probably be avoided until the Zimbabwean government finalizes its export and expropriation policies.

Source :http://moneymorning.com/2013/02/15/why-you-can-bet-on-platinum-prices-going-higher/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014