Platinum - The Fundamentals

I remember, once upon a time, when platinum was a far more precious metal than gold in terms of its price per ounce being close to twice the price of gold if I remember correctly.

We can all see that it's value has gradually diminished since those days, to the point now where it is roughly half the price of gold.

Why?

What were the fundamentals back then, what are the fundamentals now that make this so?

Should platinum be a part of an investor's precious metal portfolio, or not?

I am anti gold bug so I would never buy platinum either but from my perspective:

Platinum is used in catalytic convertors so that use is going to disappear but.. it is also used in hydrogen fuel cells and in contact lenses to cure the silicon so they are breathable. It's seems to be losing interest in the trinket (jewellery) market and supply often is more than demand.

It appears investment is a big use - or hoarding as I think of it.
Total demand in 2019 increased by 11% compared to 2018, from 7,270 to 8,060 koz, with the significant increase in investment demand more than offsetting lower automotive, jewellery and industrial demand.
https://platinuminvestment.com/supply-and-demand/platinum-quarterly

Bought some ETPMPT recently - a GlobalX Physical Platinum ETF.

Reasons being-

• Pt is currently in a supply deficit
• Many miners making a loss at current prices
• PHEV vehicle sales are growing more rapidly than forecast, PHEV's use about 10/15% more PGE's in their catalytic converters than an ICE vehicle.
• About 80% of production is in SA and Zimbabwe - country risk.

Using it as somewhere to park some cash for a while, away from the bright lights of silver and gold.

Here's a couple of articles.

houtman said:

Using it as somewhere to park some cash for a while, away from the bright lights of silver and gold

Click to expand...

Excellent thinking houtman

Platinum market faces supply deficit amid rising automotive and jewellery demand​

By Colin Hay - November 28, 2024

@houtman

The World Platinum Investment Council (WPIC) predicts that automotive demand for the precious metal will reach an eight-year high in 2025 but expects this to be offset by a significant decline in industrial demand.

WPIC chief executive officer Trevor Raymond noted that, as automakers adjust strategies to boost sales of lower-CO2, internal combustion engine-based hybrid vehicles to mitigate regulatory challenges, automotive platinum demand is projected to rise by 2% year-on-year to its highest level since 2017.

The WPIC also sees steady growth in the jewellery sector, which is anticipated to see a 2% increase in 2025, driven by a surge in Indian fabrication.

upply constraints​

Releasing its Platinum Quarterly report for Q3 2024, the WPIC reported that platinum supply remains severely constrained despite improvements in recycling, which is projected to edge up by 2% in 2024 and 1% in 2025.

The report suggested the market is expected to reach a deficit in 2024 due to exceptionally strong demand from the previous year, with sustained demand again exceeding supply.

Mr Raymond said that despite Q3 2024 supply growing by 7% year-on-year – primarily driven by increased stock releases in South Africa, which inflated the quarter’s output – global mined supply for the full year 2024 will remain essentially flat compared to last year’s constrained levels.

Industrial decline​

While industrial demand will remain above the 10-year average, it is expected to decline by 9% in 2025 as substantial capacity expansions taper.

The WPIC forecasts that net positive investment demand will continue for the third consecutive year, bolstered by Chinese bar demand.

Global platinum mine supply for 2025 is forecast to contract by 2% (-133,000 ounces) year-on-year to 5.5Moz.

Downside risks​

The WPIC also noted a number of downside risks, such as the persistently low platinum group metal basket price and ongoing restructuring, that could persist into next year.

According to Mr Raymond, the headwinds recently affecting global platinum recycling supply may be nearing resolution.

The 2024 forecast is for a 3% year-on-year improvement, followed by a 12% increase in 2025, which will nevertheless still be 8% below the pre-COVID five-year average.

I found this on Market Index on Platinum and ASX listed Platinum stocks.



gg

I own some platinum coins just for fun but have wondered when it was going to catch up to the gold run, if ever. Since it's been mentioned in the Herald Sun something must have already happened.

Not sure if there's any specific producers worth watching.



Just one week ago, I wrote about platinum as “the overlooked metal that may be the next major bull market.”
At the time, it was coiling just below the psychologically significant $1000USD level, forming a base while gold stole the spotlight.

Fast forward to today platinum has broken out, jumping over 10 per cent and currently trading around $1080USD. That key resistance at $1000? Smashed.

If you missed last week’s article, read it here.

Why this move is important​

1. Technical breakout confirmed

The breakout above $1000USD wasn’t just psychological, it was structural. Platinum had been range-bound below that level for over a year. Now that it’s cleared with strength and volume, this may mark the beginning of a new bullish cycle.

The next key level to watch: $1300USD. A monthly close above that would confirm a long-term breakout, potentially opening the path toward $3000USD-plus over the next few years.

2. Platinum still looks cheap compared to gold

Despite the recent move, platinum remains heavily discounted relative to gold:

• Gold: ~$3250 USD

• Platinum: ~$1080 USD

• Gold-to-platinum ratio: ~3.0

Historically, this ratio has averaged closer to 1.0. Today’s reading makes platinum one of the most undervalued assets in the precious metals space.

3. The fundamentals remain bullish

• Tight supply: South African mines, which produce the majority of global platinum, are struggling with electricity shortages and production delays.

• Growing demand: Platinum is increasingly used in hydrogen fuel cells and clean energy technologies.

• Lack of new supply: Few new projects are entering the pipeline, making any increase in demand likely to push prices higher.