Thursday February 14, 2008

Platinum hits record $1972.75 on South African power outages

bloomberg.com :

Platinum futures in Tokyo climbed to a record after Anglo Platinum Ltd., the world's biggest producer of the metal, yesterday [11 Feb 2008] said output will drop for a second year. Platinum for immediate delivery gained as much as $33.75 to $1,972.75 an ounce. The metal, used in vehicle emissions filters and jewelry, has surged 29% this year, almost triple gold's 10% gain. Platinum's gain this year is the second-biggest after wheat among the 33 members of the JPMorgan Commodity Curve Index.

Most mines in South Africa, source of about three-quarters of global platinum supplies, were closed for five days last month because of power shortages. Eskom Holdings Ltd., the state-owned utility, has told major customers it won't have sufficient capacity to guarantee adequate power until 2013.

- The platinum:gold ratio has been hovering around 1.90 to 2.00 for the past couple years or so. In the recent sessions it has however taken off and is now at 2.17. Credit goes to the South African power outages, seeing how South Africa accounts for most of the world's platinum production, and to the IMF for hammering gold down in the past few days (a sign of desperation in my opinion, but, ah, that's another story altogether).

That's a US Platinum Eagle bullion coin above, but personally, I'm not long platinum. By its nature, platinum is rarer, much less liquid, and costs twice as much as gold (and thus twice as hard to save up for). Unlike GLD, the gold ETF (which is holding $18 billion worth of gold bars), there are no commonly available ETF's for platinum besides an ETC listed on the London Stock Exchange. I could go for that if I really wanted to, but I've decided not to bother. Still, the long story is good, with emissions regulations getting stricter, which calls for increased platinum usage in vehicle catalytic converters.

See also :

1. Gold soars above US$920 as power crisis closes South African mines ($1652 on 25 Jan 2008)
2. Gold, oil rise after Bhutto assassination, platinum hits record ($1542 on 27 Dec 2007)
3. Platinum price hits a record high ($1505 on 18 Dec 2007)

(2008-02-14 12:55:27 SGT) [Biz] Permalink

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