Platinum Soars 81%, Cements its Star Status Among Precious Metals

Gold’s climb to ever-increasing record-setting price levels has captivated investors this year and everyone is frothing at the mouth to get in on the action. However, not many have noticed that another precious metal, platinum, has quietly claimed star status among precious metals in terms of their market performance.

So far, gold has climbed approximately 45% this year, silver has notched stellar 64% gains in the same timeframe, but platinum has left these two in the dust by climbing a remarkable 81.9% thus far into the year.

Many factors have contributed to this remarkable rise of platinum this year. There is a forecasted supply deficit of about 966, 000 ounces, according to the WPIC, the global body for this metal. Where demand exceeds supply, prices inevitably climb, and this year is testament to this fact.

Additionally, China has been stockpiling this metal by purchasing it in quantities that far exceed its requirements this year. This hoarding is worsening the supply deficit and putting upward pressure on the price in just the same way that central bank acquisitions of gold set the metal climbing in ways that haven’t been seen in recent times.

The relative value of platinum when compared to gold has also contributed to its price momentum this year. Given that gold and platinum are both precious metals with asset diversification value, many contrarians have switched to platinum due to its higher affordability appeal relative to gold. Where investor money flocks, prices tend to climb, and platinum is enjoying its day in the sun.

The demand from the industrial applications of platinum has also ticked upwards in segments like the auto industry in which hybrids require more platinum in their catalytic converters. Countries around the world are also tightening their emissions standards, which means a lot more gas-powered vehicles now require catalytic converters in order to be sold in those markets. The jewelry and hydrogen fuel cell markets have also demanded increasing amounts of this metal, boosting its price.

Online search trends reveal that interest in buying platinum is exploding among retail investors. This trend shows that retail investor interest has reached high levels that haven’t been seen in years. This suggests that the metal’s bull run could be set to gain even more momentum within the foreseeable future.

All these tailwinds could boost the medium and long term prospects of companies like Platinum Group Metals Ltd. (NYSE American: PLG) (TSE: PTM) that specialize in the extraction of platinum and other PGMs.

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