Platinum Is Speculators' New Gold Standard

Wall Street Journal ^ | 5 July 2008 | CAROLYN CUI

[shrinkermd]

Gold and silver bugs, move over.

Investors are flocking to a new class of precious metals: the kind that actually do things, rather than end up in vaults or on fingers.

Platinum prices have soared 33% this year and its cheaper cousin, palladium, has risen 22%, largely on demand for cleaner cars. A flood of new investment vehicles -- including exchange-traded funds -- that allow investors to bet on these metals' trajectory also are fueling the market.

The two metals are called "precious" because of their scarcity. Platinum jewelry has long been a higher-end alternative to gold. But unlike gold, platinum isn't viewed as a prime refuge for investors in times of uncertainty.

Instead, platinum's main use is as a catalyst in devices that remove automotive pollutants. Demand has been on the rise because of a growing auto population and tightening emission regulations. Last year, platinum's auto-catalyst demand, accounting for 60% of the use of the metal, rose 9.5%, according to the U.K.'s Johnson Matthey PLC, the world's largest platinum refiner. Total demand for platinum grew 8.6%.

Mining companies are struggling to keep up with demand for platinum, as they battle rising costs, and shortages of skilled personnel and mining equipment. Production fell 4.1% in 2007. Early this year, South Africa's electrical-power shortages hit the mining industry there and pushed platinum prices to highs. Platinum recently settled at 2,027.90 per troy ounce, 9.7% shy of the peak.

...Dented by high prices, demand for the metal has started faltering. For years, auto makers have been replacing platinum with palladium, a similar but less costly metal, in catalytic converters.

[shrinkermd]

Towards the end of the article, there are caveats as to platinum investing. Included is the use of silver and palladium as catalysts and there is now a short ETN.

[Libertarianize the GOP]

Don’t many fuel cells use platinum?

[Lancer_N3502A]

Yes, a platinum catalyst is used on the anode side of the fuel cell.

[Retired Chemist]

The reason thieves are stealing catalytic converters.

[Libertarianize the GOP]

Haven't there been experiments with nanoparticles that can accomplish the same thing without platinum?

[Rudder]

Platinum prices have soared...largely on demand for cleaner cars...new investment vehicles...on these metals' trajectory also are fueling the market.

A plethora of metaphors.

[USFRIENDINVICTORIA]

Good catch! I had a vision of that beautiful ‘66 T-bird in ‘Thelma and Louise’ hurling into the canyon.

So, O.K., the car wasn't that clean at the time, but some soapy water would have fixed that. It was a vehicle, and it would have made a great investment. It was on a trajectory in its final moments. It was a touching scene — shame about the car.

[Rudder]

LOL!