Is Platinum a Good Investment? We Investigate | Bleyer Bullion (2024)

There is no doubting that Platinum has been a disappointing investment in recent times but could that be about to change?

Platinum is currently trading around the £800 per ounce mark. That compares with a historic high of £1162 in July 2011 and a recent high of £918 in February 2021.

Outlook for Platinum Investment

Recently the World Platinum Investment Council (WPIC) published its Platinum Quarterly (for the fourth quarter of 2022) and revised its forecast for 2023.

After two years of Platinum surpluses there is forecast to be a deficit in 2023. There was a 776 koz surplus in 2022 and the World Platinum Investment Council are predicting a deficit of 556 koz in 2023.

So why the dramatic change?

Read 'Investing in Platinum, Options and Products'.

Rising Demand

There are a number of factors leading to a likely rise in demand for Platinum.

Global automotive demand for platinum is expected to increase by 10% in 2023 to 3.246 million ounces, according to the WPIC.

Demand for cars is on the increase. It’s not at pre-pandemic levels yet, but the effects of lockdowns in China, the war in Ukraine, chip shortages and cost-of-living concerns are starting to subside. Platinum is used by car makers in catalytic converters.

Platinum is becoming an increasingly important component in new cars, with the precious metal replacing the more expensive palladium in catalytic converters. The metal helps to neutralize harmful emissions in vehicles and so tighter emissions legislations and increased popularity of hybrid vehicles will put a squeeze on platinum demand.

Industrial demand is mainly coming from China, Japan and the glass industry. The WIPC are also expecting an increase in demand from China for Platinum Jewellery as lockdowns ease.

Platinum Investment Game-Changer?

The so-called “Hyrdrogen Economy” could be the game-changer that Platinum investors have been waiting for.

Edward Sterck from the WIPC commented: “While hydrogen-related demand for platinum is relatively small in 2022 and 2023, hydrogen-related demand for platinum isexpected to grow substantiallythrough the rest of the decade and beyond, reaching as much as 35% of total yearly platinum demand by 2040,”

Japan currently leads the way in developing Hydrogen as a long term replacement for fossil fuels.

Supply Issues?

There are potential supply issues to bear in mind when considering an investment in Platinum.

The refined mine supply of platinum dropped 18% in 2022, according to the WPIC, with South Africa and Russia having seen the biggest decreases.

According to UBS, South Africa typically accounts for more than 70% of the world’s platinum mining supply. The process, however, has been restricted by the country’s deepening power crisis. The WPIC reported a 24% decline in the country’s output in 2022. It anticipates continued volatility will leave the mining supply “largely unchanged” in 2023.

It was the combination of strikes and power cuts in South Africa in 2011 that led to a spike in the price of Platinum.

Russian supply dropped 10% in 2022, with war-induced geopolitical tensions preventing the transportation of platinum-containing products. The WPIC estimates that international transportation issues will persist this year and that overall platinum production in Russia will “decline slightly, but remain robust.”

Summary

There are three main factors that will influence the potential of Platinum as an investment. These are:

• The use of catalytic converters in the automotive industry.
• The “hydrogen economy”.
• The economic situation in South Africa.

Platinum is rarer than gold. In 2008 it was more than double the price of gold. The historical average is 1.25 times and yet it’s currently half the price of gold.

As always, it’s important to do your research before investing so that you can make informed decisions about where to put your hard earned money!

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As well as selling coins and bars we are always happy to buy your precious metal bars and coins. We will offer the very best price we can.

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