Five-Year Performance of Platinum
Traditionally, platinum has been valued more expensive than gold. Onlyin recent history have the roles reversed. Experts believe the extremedevaluation and role reversal will not continue for much longer. When itcomes to the platinum market, fear is the primary reason for its devaluationbelow gold. Experts anticipate platinum resuming its place above gold in thenear future.In the last five years, prices for the precious white metal has peaked above$2,300 per ounce, while lows saw it fall below $800 an ounce. These five-year highs and lows both happened in 2008 on the heels of the financialcollapse in the United States.
Platinum: 2007 and 2008 Performance
2007 High: $1,544 Low: $1,118
2008 High: $2,273 Low: $763
In 2008, platinum was trading at high of $2,270 per ounce and gold wastrading below $990 per ounce. On average, platinum traded between $200and $400 higher than gold prices. After reaching a high of $2,301.50,platinum prices plummeted 64 percent after the credit crisis of the worldforced numerous investors to liquidate commodities.With platinum demands above the current supply by 240,000 ounces, theprices began to increase to compensate for the shortage. The shortage wasprimarily due to frequent mining disruptions in South Africa. The miningcompany has been addressing problems with electricity rationing and powercuts.
Platinum: 2009 and 2010 Performance
2009 High: $1,372 Low: $918
2010 High: $1,786 Low: $1,494
In 2009, platinum prices rebounded significantly after the financial collapseof 2008 in the US. The demand for platinum jewelry prompted the increasein platinum prices. In 2010, production decreases also affected prices due toSouth African mining safety concerns.At the height of the crisis, the biggest deficit realized was 150,000 ounces.This significant deficit kept prices slightly higher despite the decrease indemand.
High: $1,887 Low: $1,398
Platinum prices continued to increase as the economy rebounded in 2011.The prices were predicted to exceed $2,000 but only managed to reach justunder this amount in 2011. The performance in 2011 was significantly betterthan previous years.South African electricity rations and power cuts were another reason for theincrease in prices. As the supply catches up with the demand, the prices areexpected to level off. South Africa and Siberia produce nearly 90 percent ofthe world’s platinum. If anything happens to the supply in these locations,the prices would increase significantly.
2012 and Beyond
Gold is currently on an upward trend and is expected to continue in thisdirection long term. Recently, gold closed slightly above at $1,875. The mostrecent platinum price, by contrast, closed at $1,873 per ounce. Speculationabout the Euro crisis and the growth of platinum production relative to2011 has investor expectations seeing 2012 as a down year in a recent poll.However, analysts are predicting that 2013 may even be the year that themetal starts seeing its value level off and even go up.
- Annual gold production is 10 times that of platinum.
- 50% of platinum is used for industrial purposes.40% of platinum is for jewelry uses.
- Japan accounts for 95% of the jewelry demand.
- Platinum is expected to account for 25-30% of India’s jewelry sales in 2012.