Bullion platinum investment at an all-time high, says WPIC

1st July 2020 By: Marleny Arnoldi - Creamer Media Online Writer

The World Platinum Investment Council (WPIC) reports that sales of platinum bullion products – retail bars and coins – surged to record highs in the first quarter of the year, with purchases totalling 312 000 oz.

Annualised, this represents a rate that is five times higher than that experienced in any other year in the last 40 years.

The WPIC adds that the opportunity presented by the prevailing spot platinum price has also given rise to imports of platinum into China in the first quarter of the year to 834 000 oz, compared with the quarterly average of 574 000 oz during 2019.

The Shanghai Gold Exchange – the major regional commodities and precious metals trading exchange – recorded an increase in sales from an average of 171 000 oz a quarter in 2019 to 455 000 oz in the first quarter of this year.

“It is widely understood that this increased demand came from savvy industrial and manufacturing buyers – including jewellery fabricators – exercising a value-led response and taking the opportunity to increase stock levels,” says the WPIC.

The council explains that economic uncertainty amid Covid-19 has caused lower platinum prices, but this has made for an attractive entry point for investors.

Platinum’s price is at all-time lows relative to gold and near record lows relative to palladium.

THE CASE FOR JEWELLERY

The council notes that the jewellery platinum market was experiencing headwinds before Covid-19, especially in its major market – China, which is seeing strong competition from gold.

However, the most recent Platinum Jewellery Business Review, conducted by Platinum Guild International (PGI), indicates that the relatively lower price of platinum compared with other precious metals could well be a factor that assists with a post-Covid 19 recovery across a number of markets.

For example, in China, although the effects of Covid-19 have severely impacted overall economic growth and jewellery demand, PGI believes manufacturers and retailers took advantage of the low platinum price to increase stock levels in anticipation of future growth and to support the development of new product lines.

PGI also anticipates that, while platinum business in the US declined in the first quarter of this year, current metal prices will continue to position platinum favourably against its main rival − 18 ct white gold.

In the mature Japanese market, PGI is hopeful that, despite weaker demand in the first three months of the year, platinum jewellery might fare better during the recovery from the effects of the Covid-19 pandemic, as the platinum price remains low and consumer demand is supported by a high level of consumer affinity with the metal.

The platinum jewellery market in India suffered more than other markets as steps to reduce the impact of the pandemic caused the cancelling of important festivals and the key wedding season in quarter one.

However, PGI believes that, looking ahead, the platinum jewellery market here is also well-positioned to take advantage of low metal prices, as well as benefit from possible industry consolidation.