Platinum is the rarest of the precious metals.
Roughly 90% of all platinum supplies come from South Africa and Russia. Virtually all of the platinum mined in South Africa is pre-sold to industrial users.
In contrast with gold and silver, there are no large above-ground platinum stockpiles to fill the gap against significant supply disruptions.
Approximately 8 tons of raw ore must be mined to produce just one pure ounce of platinum. Today, the finest and most elegant jewellery contains platinum.
Multi - Purpose Industrial Metal
Platinum is integral to the production of about 20% of all consumer goods. Platinum's unique physical properties make many industries dependent upon its use.
Gasoline, hard disk drives, anti-cancer drugs, fibre-optic cables, LCD displays, eyeglasses, fertilizers, explosives, paints and pacemakers all rely on platinum. Platinum is also the key catalyst used in fuel cells.
Japanese consumers buy approximately 48% of the world’s platinum jewellery each year.
Demand for platinum in high technology applications is soaring due to its unique properties: It is virtually impervious to corrosion, has a melting point in alloy of 3215 degrees Fahrenheit, is a powerful catalysing agent and is highly conductive.
An Environmental Metal
Over one-third of all platinum supplied to the international markets each year is used in catalytic converters to control harmful automobile emissions.
Higher North American, European, and Asian automobile emission standards continue to add pressure to auto manufacturers to increase the use of platinum in catalytic converters and devices like oxygen sensors.
Platinum catalysts are a core component for fuel cells, a power generation technology that combines oxygen and hydrogen to form water and electricity. Fuel cells are poised to become the environmentally friendly power generation source of choice in the next century, and a key source of future platinum demand.
The rise in popularity of platinum jewellery over the past two decades has been remarkable. Japan has long been a traditional source of platinum jewellery demand, but double digit growth rates over the past several years in both China and North America now make these two markets highly important. Combined they count for over 40% of world total platinum jewellery demand. Platinum is prized the world over for its understated elegance and its tensile strength, making it the most secure precious metal for setting precious stones.
Platinum coin jewellery is also popular around the world.
Platinum is known as "high-octane gold", for its stronger price moves and prospects for a higher upside. Buying platinum is an easy way to invest in worldwide economic growth because the metal is essential to the economies of many industrialized nations.
Pure platinum legal tender bullion coins provide a liquid, convenient and reliable way to invest: the Platinum American Eagle, Australian Koala, Canadian Maple Leaf, Isle of Man Noble and Chinese Panda.
All coins are 99.95% pure and are available in one-ounce and fractional sizes. Investment-grade bars are also available in 10-ounce and smaller sizes from various refiners.
Platinum proof coins offer a way for investors to both participate in the platinum commodity market and to realize the benefits of owning a collectible coin. Platinum American Eagle proofs for instance have sold out for many of the denominations, and to this day command a premium over the initial sale price in the secondary market.
In the past, only Gold and Silver Eagles qualified for IRA accounts. Recent legislation expanded the rules regarding Individual Retirement Accounts, beginning on January 1st of 1998. For the first time, platinum is now eligible for inclusion IRA portfolios, not only through the Platinum American Eagle bullion coins but through Australian Koalas and Canadian Platinum Maple Leafs. Investment is permitted in both coins and bullion of platinum, provided it meets stringent fineness requirements. These requirements are that the product be, essentially, 100% pure precious metal. The IRA trustee or custodian who stores and accounts for the precious metals, may have further restrictions. American Church Trust Company (ACT), an example of one company offering this kind of program, must limit the investments to broadly traded, fungible products which can be recorded and stored at their depository, Republic National Bank of New York.
Precious metal certificate and storage programs, such as the Mocatta Delivery Order (MDO) and the Perth Mint Certificate Program, allow investors to store their physical platinum in high security vaults for a low annual fee. By presenting the certificate entitling the bearer to receipt of metals, investors can take delivery of the metal whenever they wish, or maintain the account while holding the more convenient certificate.
Precious metals have long been recognized for their tendency to appreciate when other financial instruments, like stocks and bonds are declining. Savvy investors, however, are not content with just securing their assets against inflation and other economic dangers. They also demand the opportunity for capital appreciation. Platinum’s unique fundamentals offer investors both: The ability to hedge against uncertainty and the potential for profit.
Platinum’s supply/demand fundamentals are tight. In fact, were platinum mining to cease today, above ground reserves would last less than one year. In contrast, gold reserves would last nearly one quarter of a century. Platinum’s supply is tight even during periods of relatively normal mining production.
Strong Demand and Why It Will Continue
New clean air legislation in the United States (Tier II Emissions Standards) and in many of the world’s fastest growing economies is significantly increasing the total amount of platinum group metals used in automobiles.
Platinum is essential for the wide range of products that are being consumed in nations that are experiencing rapid gains in incomes. Because of this, world platinum use per unit of world economic output has risen rapidly in the past decade.
Platinum jewellery has gone from being a thing of the art deco past to being all the rage in North America and China. The largest economy in the world and the largest country in the world are seeing tremendous growth in platinum jewellery demand. This is in addition to Japan's relatively stable consumption of the white metal for jewellery purposes. While growth has been strong, overall market share is still low - meaning that these trends of increasing demand are sustainable for some time to come.
Platinum is used in a rapidly increasing array of products, from industrial refrigerators to spark plugs. The small amount of platinum used in each product means that the firms that manufacture them and the consumers that buy them are relatively insensitive to significant increases in the price of platinum.
Investment demand by individuals around the world is rising. Many are attracted to the vastly improving fundamentals in the platinum market. In rising markets, platinum normally develops a significant premium over gold. Platinum has historically tended to be more expensive than gold because it is considerably rarer and has more extensive and irreplaceable applications.
Catalytic converter platinum consumption in developing nations is becoming an increasingly important factor for the platinum market. Much of the world runs on diesel, a fuel that works best with platinum catalysts as opposed to palladium catalysts. Countries that, two decades ago, might have had little if any environmental legislation, now have restrictions on auto pollutants in place. While there has been some loss of automotive catalytic converter market share to palladium that resulted from shifts made when palladium traded at $130, current palladium prices (now near par with platinum) have reversed this trend back toward platinum usage. Implementation of Tier II standards in North America and requirements for diesel engines in Europe will bring further growth in platinum demand.
Catalytic converter legislation is spreading quickly in Latin America. In the past five years the nation with the largest economy in the region, Brazil, and the nation with the fastest growing economy, Chile, have both passed legislation mandating catalytic converter use.
Hong Kong, Malaysia, Singapore, Taiwan and Thailand all have passed legislation enforcing domestic catalytic converter use before the end of the decade.
Auto sales in Latin America and in the emerging market economies of East Asia have grown rapidly in recent years. It is estimated that in the coming 10 years, platinum consumption for catalytic converters in emerging-market economies will surpass the total now consumed in North America, Japan and Europe.