When Will Platinum Overtake Gold Again?

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Simply looking down the list of prices contained within our Global Precious Metals MMI, the biggest story may appear to be gold’s significant increase over the past month. Overall, the MMI reading for March reached a high we haven’t seen since last November: 77. However, the focus should – and will – be on another precious category with greater industrial implications.

First, on the gold front…

US Gold Price Shoots Up – Why?

With China’s stock market turmoil of late, many investors turned to gold as the classic safe-haven commodity. Of course, now that the stock market in China has stabilized, the “damage” has been done, with the US gold bullion price on the MetalMiner IndX having increased nearly 15% since the beginning of February.

Global-Precious-Metals_Chart_March-2016_FNL

The US dollar has also taken a break from the tear it’s been on lately and weakened in January, which allowed gold — and other commodity metal — prices to rise.

The Main Story: Platinum

Speaking of investors and gold, let’s go back to the main event: platinum.

Editor at large Stuart Burns recently spoke with Trevor Raymond, the director of research at the World Platinum Investment Council in London about the firm’s sixth quarterly report on the platinum market, and subsequently analyzed the metal’s outlook based on the report’s contents.

There are two interesting takeaways in particular from Stuart’s analysis, both relating to investment and gold.

#1 Investment-Grade Bars and Coins

While total global demand increased to 8,205,000 ounces as stronger automotive, industrial and investment demand more than offset a dip in jewelry demand from China (and demand again exceeded global supply in 2015 by some 380,000 ounces), bars and coins represented the most significant single uptick.

Free Sample Report: Our March Metal Buying Outlook

“Demand for physical coins and bars rose from 50,000 ounces in 2014 to 480,000 ounces in 2015, contributing to a net gain for investment of 73% from one year to the next,” Stuart writes. Wow. While WPIC doesn’t expect this gangbusters rate to continue in 2016, retail investment will still figure prominently in how the metal behaves.

#2 Relationship Between Platinum and Gold Price

And we finally circle back to gold…here’s quite a nugget:

“The platinum price has only four times previously — over the last forty years — been at a discount to gold for a sustained period. In all previous cases, the price has recovered strongly in the subsequent year. We have no axe to grind one way or another, but we do wonder — with supply constrained and the market in widely acknowledged and persistent deficit and demand from a number of sectors remaining robust — is this discount likely to prevail?”

Read Stuart’s full analysis of the WPIC report.

This Month’s Key Precious Metal Prices

The US gold bullion price increased 14.9% to $1,283.30 per ounce over the past month. (We also saw a gain in China’s gold bullion price, rising to $39.99 per gram at the beginning of this month.) US platinum bar prices bumped up to $937 per ounce, an 8.4% increase – and the 14th straight month of that metal being at a discount to gold.

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