Platinum… the Struggling Precious Metal

Platinum… the Struggling Precious Metal

Gold and Silver have been on a tear in 2020… but Platinum seems to be the nearly forgotten of all precious metals. Platinum’s performance over the last year is sick, sick, sick compared to U.S. Stock indexes or its fellow precious metals— Gold and Silver.

Platinum Price Chart

As a disclaimer, I own some Platinum… one ounce in fact. Yes, one lousy ounce. That expresses how I feel about Platinum as a precious metal or a speculative investment.

Is Platinum About To Wake Up?

A recent article in Aug 28, 2020 Bloomberg Quint however made me reconsider Platinum as it featured this headline—

“Investors Who Missed Gold Rush Pile Into Platinum“

This well-research article made some interesting points.

  • Holdings in Platinum Etfs are at all time highs
  • 600,000 ounces of Platinum added to Etfs since mid-May.
  • Investors are hoping for a catch-up rally after months of Platinum lagging the rapid rapid rise of Gold and Silver.

We’ve had a lot of experience in the precious metals markets having bought and sold a billion or two dollars in Gold, Silver, and Rare Coins since 1985.

We sold very little Platinum to “hard money” investors rushing to safety during The Dot Com Crash of 2000, during the 911 disaster, but Platinum did go crazy about the time of the 2008 Great Recession.

Platinum Soared to $2,250

Back in 2008 the price of Platinum hit a record price high over $2,250 an oz More than two times the Gold price in U.S Dollar terms. There was lots of speculation and supply disruptions from South African mines at the time.

So yes, Platinum could quickly recover from the 2020 duldrums. It’s nice to see investor demand demand kicking up in ETFs. This partially offsets a drop in consumption from jewelry and the auto industry crippled by COVID19.

Here are my personal opinions about Platinum as a crisis investment during the pandemic.

  • Platinum needs car sales, it’s still used in catalytic converters to clean the air. Weak car sales, weak physical platinum demand.
  • Mall lockdowns have killed platinum jewelry sales. With Platinum trading at half the price of Gold, the white metal is very popular in rings and jewelry. Open jewelry stores and malls will see more sales and physical demand will start to rise.
  • Platinum has never been money. When the “hard money” guys start hoarding away precious metals because the economy is going to crash, they will always hoard recognizable Gold Coins and Silver Dollars.
  • In a crisis, like an end of the world scenario, who will barter Platinum. Nobody knows what it is or can test it for authenticity or purity.

As a speculative coin investment like an American Eagle Gold Coin or Silver Dollar, Platinum Coins are unloved by collectors or the mints.

Platinum Coin Issues

Platinum in a pure firm is extremely hard. It’s difficult for coin blank manufacturers to melt at very high temps and then shape the planchets used for coins. That raises the cost to produce. The mint personnel have to use special processes to apply pressure to bring up the three dimensional designs. That’s also time consuming and increases the premiums.

Platinum “rare” coins that collectors hoard are almost non-existent.

As of this writing, there’s a six week delay between paying for a Platinum Bullion coin and any promise offuture delivery.

The U.S. Mint offers a Platinum one ounce coin directly to the public for $1,495. They are goofy designs, 2019 dated that are leftovers that did nit sell. They are selling at a 50% markup. No thanks!

Platinum Investment Conclusions

While the spread between the low price of Platinum under $1,000 and Gold around $1,900 make it tempting to speculate in Platinum, but I wonder. I can see me doubling my core Platinum holdings to two ounces, maybe.

In my opinion, Silver is far more likely to double in price than either Platinum, Gold, or the DOW Stock index.

Read more at: https://www.bloombergquint.com/markets/platinum-assets-in-etfs-swell-amid-rush-into-precious-metals

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