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Will Platinum Shortages Result in a Spike in Price?

American Platinum Eagles
American platinum eagle coin

According to this article from Yahoo Finance, record deficits in the physical supply of platinum and potential unrest in the South African mining industry, are likely to result in an increase in the price of platinum over the next two years before it tops out in 2015. The price of platinum is affected much more by industrial uses than gold. In particular, jewelry and industrial, including auto demand, greatly affects the price. If auto demand exceeds forecasts, we’ll likely to see a spike in the price of platinum.

Even without an increase in auto demand, it’s possible that we’ll still see upward movement in the price of platinum due strictly to the record deficits of physical platinum. Other factors, such as a recently issued ETF that is backed by physical bullion, all point to increased demand in the precious metal.

In addition to the above, all precious metals tend to move somewhat in lockstep, so if we see increased demand for gold later in the year, the price of platinum and silver will likely follow. Of course, if we happen to experience another recession, physical demand will fall, resulting in a decrease in price (at least initially).

In summary, platinum is an interesting precious metal that is primarily affected by demand in the industrial market, but also has its place in the jewelry, coin and bullion market. Platinum coins, including platinum eagles, platinum maple leafs and platinum pandas, are some of the most sought after coins in the coin and bullion market, so some consideration should be made to add platinum coins and bullion to a precious metals investment portfolio.

Tony Davis
Tony Davis