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automotive|copper|energy|gold|industrial|manufacturing|platinum

Platinum's value overlooked, says council

3rd February 2021

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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Despite platinum’s strong price performance, it remains undervalued compared with gold and other industrial metals, such as for example palladium and copper, says industry body the World Platinum Investment Council.

Since the start of this year, the platinum price has traded at over $1 100/oz, up over 80% since the start of the Covid-19 pandemic.

“As a commodity, platinum is not widely well understood. Some view it as a precious metal, while others believe it is an industrial metal. Aspects of platinum’s market value can be overlooked if its ability to straddle these two categories simultaneously is not fully appreciated.

"In reality, platinum is both a precious and an industrial metal – over 65% of platinum consumption is expected to come from automotive and other industrial uses this year.

"From an investment perspective, platinum is closely correlated to gold, bringing similar diversification benefits to a portfolio, as well as being a hedge against currency and interest rate fluctuations and a store of value. Platinum is also a hard asset, which, like gold and other commodities, has been in great demand amid the extreme volatility of many equities recently,” the organisation notes.

It highlights that platinum has a unique combination of physical and chemical properties, which is why it is used so extensively in industry and manufacturing, where its high melting point, density, ultra-stability, extreme noncorrosiveness and catalytic effects are valued. 

It mentions that one of platinum’s most important uses is as a catalyst – the presence of even a small molecule can speed up chemical reactions, reducing process energy needs and improving yields.

Owing to it being biocompatible and well tolerated by the body, platinum is also used in numerous established medical treatments and is at the forefront of many new ones, the council enthuses.

Moreover, it notes that platinum is at the forefront of two key technologies that are unlocking the rapidly expanding, zero-emissions hydrogen economy – fuel cells and electrolysers.

At the same time, it remains key to the automotive industry, reducing emissions from internal combustion engine vehicles, the organisation adds.

Platinum is currently growing its share of the autocatalyst market as it continues to substitute for significantly more expensive palladium in gasoline engine vehicles on a one-to-one basis, elaborates the council.

“Investors, familiar with platinum’s strong correlation to gold, are becoming more aware of the significance of platinum’s industrial credentials, which are providing upside as the global economy recovers from the effects of the pandemic.

"Coupled with its strong demand growth potential from the automotive and hydrogen sectors, more and more investors are viewing platinum’s current discount to its peers – both precious and industrial – as an investment opportunity,” the organisation states.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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