Platinum Coins Poised to Rise
Until recently platinum was in its usual position of surpassing gold. This is generally the case because platinum is much rarer than gold, and is subject to supply problems. However, platinum is now trading below $1600 per ounce. Yet this is part of the beauty of this metal. It is subject to large price swings which make it the ultimate speculative investment, because platinum trades at such a high spot price.
While car manufacturers are working hard to use as much lower cost palladium as possible, platinum is still a vital element in the production of catalytic converters. Part of the reason the spot price recently dipped is because a safety issue strike at one of South Africa’s leading platinum mining companies has just settled. Yet, labor issues in South Africa are common so this lull in its price is temporary.
The automakers are back, and sales are strong, especially in the United States and Canada. Moreover, car sales in most emerging markets remain strong as well. However, there is growing concern that China’s auto market may slow. While this could keep platinum prices in check, North American and other emerging car markets can likely overcome any slump in China. Platinum is expected to average $1775 this year, and will likely pass gold.
Platinum is a great companion investment to gold. This is because while gold is solid and stable, platinum is volatile. The best way to invest in platinum is to buy platinum bullion bars or platinum bullion coins like the American Platinum Eagle, or the Canadian Platinum Maple Leaf. Both are minted to high standards and guaranteed. Bullion bars and bullion coins have their worth tied to the current spot price of the metal.
Platinum is also used to produce jewelry, and is very popular in Asia. It is also used in the chemical, electrical, and glass industries. It is estimated that if platinum mining stopped today the current supply would last one year. On the other hand if gold mining ceased, the supply would last 25 years. This shows how rare platinum really is.
To close, until recently platinum surpassed gold. However, a South African mining strike was just settled forcing platinum’s price down. However, since mining labor disputes are quite common in South Africa another hitch in production and supply is expected. Platinum is a leading component in the production of catalytic converters. Since car sales are robust it estimated the platinum price will settle at $1775 per ounce this year.