Commodities | Nov 21 2006
By Greg Peel
Gold might be considered the king of precious metals, but it doesn’t hold a candle to platinum when it comes to price. The metal rose 4.9% to US$1248/oz in London overnight – the biggest single rise since 2000 – and carried on to close at US$1254 in New York, representing a US$66 move, or 5.5%. There are fears that demand will outstrip supply.
Platinum is the leader of what are known as the “platinum group metals” (PGM), but it still doesn’t top the chart. Rare rhodium is actually trading at around US$4800/oz, and there are some other obscure “–iums” that exist in minute quantities and trade at silly prices as well, although we never memorised that far on the periodic table. Palladium (US$318/oz) kicks in as a substitute for platinum when the price differential gets ridiculous. It’s not clear at what point that is.
While platinum is considered “precious” – given its use in jewellery and the fact that a platinum record represents more sales than a gold one, and that a platinum card is a bigger show-off than a gold one – it also has specific industrial uses. Its major use is in car catalysts, but it is also become a component in electronic devices such as computer hard drives and iPods. It is no great surprise then that PGM heavyweight Johnson Matthey is expecting a 5.3% increase in such usage, to 7 million ounces, in 2006.
TheBullionDesk reports that industrial buying may be one thing, but a key driver is also funds buying. Earlier this month there was talk of an exchange traded fund being introduced.
Taking note of the effect of ETF listings on both the gold and silver markets recently, experts are predicting a price rise of 5-15% if the listing goes ahead. In the meantime, platinum demand from carmakers is tipped to increase by 15% this year.
South Africa is the home of platinum, and the world’s number one and two producers – Anglo Platinum and Impala Platinum – saw their share prices rise by 9% and 8% respectively in Jo’berg yesterday.