Platinum to Outshine Gold?


"Buying opportunity will likely arise in the next two months."

Summer doldrums are here for metals prices—and we could see a couple of months of falls.

Gold bugs will likely top up holdings on dips—but there could be a better alternative safe haven.

The upside in platinum prices over the next few years could be better than gold. . .and a buying opportunity will likely arise in the next two months.

Investment demand, particularly in H110 has been strong. RBS Analyst Nick Moore expects platinum demand to improve in Q410 and sees strong price upside in the next few years. "We continue to expect significant upside to the platinum price with a 2013 average of $2,000/oz.," he said.

Platinum ETFs have absorbed more than 370,000 ounces of the physical metal in 2010, according to Moore, which has been enough to tighten market conditions. However, investors have been taking profits.

CPM recently noted that ETF holdings of platinum had declined over the last few months but argued the metal would still be attractive to investors due to supportive supply and demand.

The consultancy expects total supply, including recycling, to rise 5.5pc to 7,468,461 ounces this year, as higher prices prompted mines that had been mothballed to be brought back on stream.

"A strong recovery due to new production capacity coming onstream is projected to boost South African output to 5,112,000 ounces in 2010," CPM said.

Russia is forecast to increase 2010 platinum production to 890,000 oz., from 831,000 oz. in 2009. However, as the global auto sector recovers, industrial and investment demand is expected to support the price.

Platinum looks like a great alternative to gold over the next few years for investors seeking a safe haven "currency"—the next few months could see a great buying opportunity. Just keep your eye on the dollar.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe