Precious Platinum Poised to Shine
Source: Money Show, Igor Greenwald (7/5/11)
"Right now, platinum is not getting the respect it deserves. Expect that to change."
Platinum is the rarest of the precious metals; for every ounce of the stuff lifted out of the ground, we mine roughly 15 ounces of gold and 120 ounces of silver. It's also traditionally the most expensive, though gold has been catching up rapidly in recent years.
Like other commodities, platinum has pulled back of late out of concern about a global economic slowdown. Platinum has been weighed down by: Declining demand out of Japan, after the twin disasters there crimped auto production; its biggest market, Europe, has been slowing notably of late as the European Central Bank hikes rates despite the worries about sovereign debt; Eeven China, the anticipated source of much future demand, has seen auto sales cool off this summer.
All of these demand drags, however, are likely to prove much more temporary than the longer-term risks to supply. South Africa accounts for 76% of platinum's global output, with much of the rest coming from Russia and Zimbabwe.
The ANC's Youth League has called for nationalization of mines and banks, and the government is studying the option. But top South African executives are sure spending a lot of time trying to explain what a terrible idea this would be.
At any rate, the possibility is now at the center of legitimate political debate, and will only advance if the economy can't shake the blues.
It takes well over a ton of ore to produce the three grams of refined platinum required by a typical catalytic converter. That makes the metal one of the scarcest and least accessible commodities on earth.
Right now, it's not getting the respect it deserves. As Asia and Africa catch up to the developed world, expect that to change.