The Value Of Platinum
Platinum is an extremely rare metal that is used extensively in a multitude of industries. For example, the automotive industry has a variety of uses for the metal. In addition, jewelers find this to be an extremely desirable material, especially for important pieces such as wedding rings and engagement rings. Other industries that have demand for platinum are the chemical, glass, and electrical manufacturing industries. These industries are not going away any time soon, and the supply is limited. Therefore, platinum is more valuable than both gold and silver. If mining of platinum and gold were to cease today, there would only be about a year’s supply of platinum compared to a quarter century supply of gold. The high value of Platinum is due to its relative scarcity and its wide range of use.
A majority of the platinum we see today comes from South Africa and Russia. These two areas combined yield approximately 92% of all platinum mined in the world each year. The Bushvelt Complex is located north of Pretoria, South Africa, and supplies approximately 2/3 of the world’s annual mined platinum. Platinum was originally transformed into a valuable product in Russia. It was discovered in the gold fields of the Ural Mountains in the early 1800s. The government then decided to make rubles out of platinum thereby setting the groundwork for a new system of backing money (re: gold standard in the United States). Today, the Noril’sk-Talnakh region of Siberia supplies roundly 25% of the world’s mined platinum annually.
Since the nineteenth century, the value of platinum has increased dramatically. Today, it has even surpassed the value of gold, which has historically been the premium rare metal worldwide. As recently as August 5, 2011, the price for this metal closed at $1722 per 10 ounces. The United States is not the only nation competing for this valuable resource. India and China, two emerging industrial giants, are investing heavily in the platinum market for its ability to clean up air pollution. The automotive industry uses platinum to create autocatalysts that are responsible for turning car exhaust emissions into less-harmful nitrogen, water vapor, and carbon dioxide. Platinum will continue to be in demand for as long as India and China continues to manufacture cars and other vehicles.
It is as good a time as any to put platinum in your investment portfolio. It is simple supply and demand economics.