Written 5/3/2024
In this post, I want to discuss Platinum Price and whether Platinum bullion is a good option to buy this year.
Just to give some general background on Platinum, Platinum is one of the world’s scarcest major metals and it’s used primarily to produce automotive catalytic converters. Also, platinum is used in petroleum refineries and in the chemical and electrical industries. Right now, South Africa accounts for 80% of production with Russia and North Americ accounting for most of the rest.
One could make the argument that with supply so concentrated that if Turmoil were to result in South Africa, we could see a big shoot up in price.
In terms of price, platinum is hovering just under $1000, and its down just slightly from about a year ago when it was about $1000. Like most commodities right now, Platinum appears to be riding this commodity boom as its price is up, about 4% the last 30 days and 9% the last six months. Platinum behaves like an industrial metal increasing if the economy is booming and industrial demand is going up.
One interesting thing to about Platinum Price is that it’s not really driven by fear or viewed as a safe haven. However, Platinum prices move with gold prices, so if Gold is increasing, it increases the chance of Platinum price going up. It’s not always the case though as Industrial demand, especially from the auto industry, really drives the price.
I should mention Platinum is used in jewelry and it’s reasonable to assume if it comes into fashion, this could drive demand higher too. I think because of the price being so high though, we don’t see a lot of platinum jewelry.
So, it’s clearly a rare metal, being rarer than gold, but most of the questions surrounding Platinum have to do with the demand side?
And in my opinion, this really comes down to one question: Do you believe internal combustion engines will still overwhelming dominate the auto market in the next 10-20 years?
To elaborate, Electric vehicles use very little if any platinum as there is no need for catalytic converters. Many the last few years have been bearish on Platinum because analysts believe the aggressive push into EV’s will drastically reduce the demand for Platinum. But it appears we are seeing a huge rejection of EVs in the auto market by consumers now. Many auto companies are stopping production or at the very least going back to the drawing board to try and create a better, less expensive EV.
This raises the question; will the public want these new EVs?
Comment let me know if you have an EV or are thinking of buying one ever? Do you think American consumers come around and buy them eventually?
Right now, the auto market is about 90% gas vehicles, 10% Electric Vehicles.
There are all sorts of targets, especially from the Biden administration. The recent tailpipe rule targets 35% to 56% for EVs by 2032, and 13% to 36% for plug-in hybrids. This means that on the low end 40% of new vehicles will be either EV or hybrid and on the high end it would be around 80%. This only accounts for new vehicles so we could naturally estimate those numbers to be smaller, although they are still huge changes in the economy.
To me I think the only legit chance EVs really have in the next 10-15 years is if they can get the price significantly lower and improve the quality of the vehicles. EVs are very heavy and it’s clear the infrastructure is not really there yet, especially in rural areas. Also, this doesn’t even get into large vehicles that require diesel.
One other X Factor with Platinum is if they find another major use for it, one in an exploding industry, this could really shoot up the price.
So, will I buy Platinum?
I continue to watch the price, but for now I’m going to stick with silver and gold. My reasoning is simple and that’s simply that I think Gold and Silver are undervalued. It’s not that I’m against buying Platinum or owning any, but I personally believe a better plan is to watch the price for a significant price drop. I suspect at some point the price will nosedive due to EV mania. At that point I’ll jump in and buy some.
Let me know in the comments if you own any Platinum and where you think price will go in the future.
Thanks for your time.