To begin with let's look at a few facts about platinum.
- The annual supply of platinum is only about 130 tons.
- It takes 10 tons of ore to produce one ounce of pure platinum.
- All of the platinum ever mined throughout history would fill less than 25 cubic feet.
- Platinum is 11% denser than gold and weighs more than gold. One cubic foot weighs 1,330 pounds.
- Relative to gold and silver, platinum has many more industrial uses.
- More than 50% of platinum is destroyed through industrial use.
- Unlike gold, there are no large above ground inventories of platinum.
- South Africa produces 80% of the world's platinum.
Since its recent low, platinum has had a good run rising from $761.50 on October 27, 2008, to Thursday's close of $1,062.00 per ounce. Like gold, platinum buyers are looking for a safe haven investment. Very often platinum follows gold for this reason.
Yet as stated above, platinum has many industrial uses, the main one being for car and truck catalytic converters. Since there has been a drastic slowdown in auto production. The bears are saying that this rally will soon run out of steam.
The bulls on the other hand, contend that the current flight to safety is real and will continue to propel platinum prices higher. The bulls also argue that as the economy strengthens, industrial demand for platinum will grow as well.
The traditional gold/platinum spread is for platinum to trade about $200 over gold. Right now the spread has narrowed to about $100.
Would you buy platinum for investment purposes?
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