Many people are surprised to hear that the price of gold this week surpassed the price of platinum. Â Up until recently there has been a fairly large discrepancy between the price of these two precious metals. Â What has caused this gap to close and why has the price of gold eclipsed the price of platinum for the first time since December 2008?
The price of gold has been acting more like money as of late with the recent economic issues affecting the United States and beyond. Â The sovereign debt crisis in Europe, including the downgrade of the debt of Ireland, Portugal, and Greece to junk status caused gold prices to soar due to fears of contagion and a possible global economic crisis.
Following the sovereign debt crisis in Europe was fear that the debt ceiling in the United States wasn’t going to be raised prior to defaulting on our national debt  This caused the price of the dollar to drop and resulted in investors fleeing to what they perceived as safe investments, such as gold, silver, and platinum.  It appeared as though the price of gold moved on a daily basis based on how close the two parties were to an agreement.
Shortly after Congress agreed on a bill to raise the debt ceiling prior to the Treasury running out of money, Standard and Poors (S&P) made a bold move and downgraded the sovereign debt of the United States from AAA to AA+. Â They also assigned a negative outlook on the nation’s debt and deficit situation. Â This is the first time that the United States has lost its AAA credit rating, and as expected the price of all precious metals, but most notably gold, soared in response to the downgrade.
If this wasn’t bad enough news, there are now concerns that the debt of Spain may be downgraded. Â Spain has one of the larger economies in Europe, and an inability of Spain to pay their bills would be devastating to the Euro. Â In response to this news, bond yields in Spain jumped, the European Central Bank announced that they were going to begin buying the debt of struggling nations, most notably Greece, Portugal, and Ireland, and the price of gold once again soared.
While we don’t have a crystal ball, it appears as though we’re beginning to experience a global slowdown, with many nations experiencing substantial financial problems due to runaway debts and deficits. Â This slowdown has caused the price of commodities to drop, as the expectation is that there will be less demand for most commodities in a slowing economy.
While platinum has continued to perform well in recent weeks, as all precious metals have due to a flight to quality and safety, it hasn’t performed as well as gold due to the fact that it has a number of industrial uses. Â One of the primary uses of platinum is for catalytic converters. Â If there’s a global slowdown, the assumption is that there will be fewer vehicles manufactured; therefore, there will be less demand for platinum. Â This appears to be the primary reason that the price of gold has surpassed the price of platinum, even though platinum is 15 times more rare than gold.
Atlanta Gold and Coin Buyers, Atlanta’s premier coin buyer, deals in all types of coins, including numismatic, gold, silver, platinum, and palladium, so if you’d like to take advantage of the relatively high prices of gold, silver, and platinum and sell your coins, we would love the opportunity to do business with you. Â Alternatively, if the global economic issues have you concerned, and you would like to buy gold, silver, or platinum coins as a hedge against an economic crisis, we have plenty of these coins in stock.
Give us a call today at 404-236-9744 to schedule a free no-obligation evaluation and appraisal of your coins and let us earn your business!
