Platinum: The Undiscovered Gold?

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"At $1,000 per ounce, platinum miners are struggling, cutting back production, and laying off staff."

One of my goals is to find better sources of information on which to trade or invest. Toward that end, I found a recent Bank of Montreal Conference on precious metals on iTunes. It's free in podcast form.

I listened to a half hour presentation by the CEO of Aquarius Platinum dated 2/24/09. I learned a few key things.
  1. At $1,000 per ounce, platinum miners are struggling, cutting back production, and laying off staff. At least in South Africa, platinum must be very expensive to mine and produce.
  2. The two primary "drivers" of the platinum market are its use in emission control devices in vehicles and jewelry. In particular, Chinese women have a strong fondness for platinum. My heart skips a beat when I hear what Chinese consumers favor.
  3. The speaker implied a fairly limited demand for investment purposes, noting ETF purchases as having a potential future impact on platinum pricing, but not now.
My analysis: like silver, platinum is priced in large part as an industrial metal. Platinum in particular is down about 50% from its peak pricing about a year ago due to the decreased rate of vehicle production.

The eventual rebound in the auto industry, demand from Chinese consumers, the likely uptick in investor demand, combined with the inherent scarcity of the metal and its high cost of production, make for a very attractive investment in the physical metal.

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