Asset Strategy, Market Insights

Is Platinum a Good Investment Today?

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Is Platinum a good Buy?

The platinum price is dropping and is now underperforming gold and other precious metals.

Platinum is facing the same challenges as the gold and silver markets.

The US dollar is strengthening, interest rates are increasing, and trade on Wall Street is booming. Investors aren’t looking for safety but for economic strength.

As a result, platinum—along with the other precious metals—has lost value, and it is currently down 16% in 2018, a much steeper decline than silver did at the same time (7%).

Platinum demand is decreasing

Platinum’s steeper decline can be attributed to lower demand from the automobile industry, which is forecast to drop 6% in 2018.

In particular, the diesel car sales are looking bad, and this is hurting platinum more than other metals because it’s used in diesel autocatalysts. Part of the blame for lower sales can be cast on Volkswagen and the 2015 scandal. The assumption that diesel was significantly greener than gasoline proved to be false.

Due to lower demand, platinum is currently in surplus and is estimated to exceed demand by close to 300,000 ounces this year.

Other factors impacting the platinum price include foreign exchange markets.

The South African rand has dropped, and miners, who are typically paid in US dollars or euros, receive less rand when converting their paycheques.

Platinum is an interesting investment option

The political environment in South Africa might soon get way worse, further weakening the rand and possibly disrupting the supply of platinum.

The price of platinum is significantly lower than the price of palladium. The two metals are in most cases interchangeable in catalysts, so carmakers may see a good deal in switching to platinum.

At these prices, platinum could be a great choice for bullion investors, whether it’s for speculation or for diversification.