The Prospects for Platinum
8 Mar 20190 comments
One precious metal currently worth investing in is platinum, cheaper than gold yet, according to many, in greater demand. But what are the prospects for Platinum?
40% of the demand derives from the automobile industry; platinum is an essential component of catalytic converters, now a necessary component for all vehicles. Other industrial applications include jewelry (30%) and investment (10%).
Platinum, along with gold and silver, is a safeguard against collapsing equities markets. When stocks and bonds fall, investors will look to these precious metals, thus causing prices fluctuations. When the United States faced the 2008 depression, platinum prices soared by 70% whilst gold prices increased by 45%.
By the end of 2015, investors were, and still are, fearful of a slump with, according to a Wall Street Journal Survey, 21% of economists believing that America will face a depression within the next year; a percentage twice as high as that reported in 2015. As Paul Krugman reported in the New York Times: “It’s not a recession, at least not yet, but it is definitely a pause in the economy’s progress.”
This grim economic climate will increase demand for recession inverse assets like gold, silver and platinum. In addition, supply deficits are expected this year and thus platinum prices could outclass gold in the near future. To meet expectations on demand, platinum suppliers will have to access their stockpiles. Moreover, the World Platinum Investment Council forecasts a drop in stockpiles by 20% (to 2 million ounces).
Whilst these levels might seem sufficient, the market appetite for recession inverse assets can be tremendous. Indeed, in the first quarter alone, ETFs gold demand was over 11 million ounces and total investment demand was almost 20 million.
So bear in mind - if investors turn to platinum, it could send price flying!