As the gold rally seemed to slow along with silver on international markets this week, platinum-group metals (PGMs) like platinum have shown a sudden sharp recovery.
But will it last? is the question for investors.
Platinum prices had been generally just rising slowly amid slight dips, but a jump in spot prices saw the commodity trade above $1,600 an ounce for periods on Thursday.
Bloomberg News reported that the most recent squeeze comes after China removed a tax exemption for a state-owned giant that dominates platinum exports, meaning that platinum imported before 1 November can potentially be sold at a large premium, tax-free.
Mining expert Peter Major (director for Mining at Modern Corporate Solutions) doesn’t seem to give much weight to the impact of this move on prices.
The fact is that platinum, and all the PGMs have been running strong, pulling the industry ‘out of the muck’ these last three months, he says.
Major also notes that, at the recent Joburg Indaba, the three major platinum producers couldn’ quite explain what was driving up prices.
“They were at pains to explain why prices have gone up – they said prices did fall too hard and there is constrained supply, but they’re producing the same amount they had 15-20 years ago, and there is no expansion. But none of them could pinpoint why we had this real 15% increase in the PGM prices, but boy were they happy about it!”
Major expresses amazement at the fact that platinum now hit $1,600 an ounce from less than $1,000 in probably the space of three months maximum.
“Platinum was one of the deadest metals for the last ten years… and then literally three months ago somebody just woke up and said, ‘Hey gold’s pushing 4000 and platinum’s not even 1000 an ounce – is gold really worth four times as much?’ And bingo, a rocket slide took off… and then palladium did the same thing, and even rhodium.”
For more detail, listen to the interview audio at the top of the article