Platinum?

[pyewackitt]

Ok boys and girls - time for something different...

 

was browsing kitco and noticed Platinum has fallen to under $1100/oz recently...

 

http://www.kitco.com/charts/liveplatinum.html

 

In the last year it has spiked at $2252/oz and has now fallen to under 50% of that price. Also looking at platinum against PoG I'd wager we're at about as close to parity as there has been for a long long time.

 

So here's my questions?

 

1) Why now? What has changed to make platinum less attractive

2) Platinum as an investment/hedge metal - reasons for/against? (certainly not VAT or CGT free in UK)

3) Purchasing... are there good coins, bar suppliers people have used/would use?

4) Futures for Platinum... likely to regain its lost ground... perhaps the next rhodium spike?

 

Thanks in advance for your input - i think this is an interesting time for Platinum and whilst not invested in it myself the recent pullback warrents good reason for discussion.

 

- Pye

[Perishabull]

Pyewackitt, I have been looking into this and think there is some value here, also in Palladium. Obviously these have been massively sold down as we are headed into recession, much less industrial demand. Hedge funds are liquidating to raise cash for redemptions so I suspect there is an element of that also.

 

However, I think the value comes from various angles here;

 

The cost of mining Platinum and Palladium is highly correlated with the cost of oil. Oil has gone from $147 to $70, this is not going to last forever.

 

From what I have read, most of the world's production comes from South Africa and Russia, their respective currencies have lost a lot of ground to the dollar. Therefore, input costs, especially for the South African mines, will be a lot higher. That will inevitably lead to profitabilty concerns and production could be cut to limit supply and boost the metal price, or one of the few mines could close, again leading to less supply and higher metal prices.

 

The credit contraction could also lead to funding problems meaning less profitable mines could hit problems. You will have been reading about Deripaska in the papers, he needs credit for his Nikel mining company, they also produce Palladium or Platinum, I forget which. If he can't get it the mining company is going to have problems.

 

Check out - http://www.platinum.matthey.com/

 

I am considering investing in both metals using ETFs, ETFS Physical Platinum (PHPT) and ETFS Physical Palladium (PHPD). I had a quick look at the ETFS website, it appears that they are backed by allocated metal but I will have to go through all the small print, I will have to consider the forex component of the trade however it is difficult to see sterling appreciating against the dollar anytime soon.

 

Had a quick look at physical and the prices are WAY above spot.

 

The considerations here appear to be, how much further can the prices fall? When is the bottom likely to be in?

 

Any other ideas regarding methods to invest in these Pyewackitt? Do you think the products I mentioned are safe?