This could help lift prices too - especially if there is a rebound in auto sales for traditional gas guzzlers and diesel vehicles in China and Europe. That's good news for the rest of the world Costfoto/Barcroft Media/Getty ImagesĬhina's economy is growing again. Lianyungang City, Jiangsu Province, China, 15 July 2020. Workers make aluminum caps for car generators in a workshop. There also is a global supply deficit for platinum right now. “That could make this an interesting story for platinum and all precious metals,” Dunn added. There could be a huge amount of stimulus - trillions of dollars spent,” said Steven Dunn, head of ETFs at Aberdeen Standard Investments, which manages the Aberdeen Standard Physical Platinum Shares ETF That could be a combination of more relief for consumers and businesses struggling due to the pandemic as well as a long-awaited package to boost infrastructure spending. More stimulus and auto rebound could boost prices The president (regardless of whether it’s Donald Trump in a second term or Joe Biden) will need to quickly work with Congress on more economic stimulus in 2021. Platinum, along with other metals, may also get a boost after the election. Moy added that platinum currently is extremely “underpriced” compared with gold and that in a normal economy, platinum and gold prices should be much closer to parity. Will Rhind, CEO of GraniteShares, noted that platinum prices have historically traded at a premium to gold. That could boost all metals, but platinum has much more room to run to catch up with gold, which is currently hovering around $1,850 an ounce. “So there will be point where investors flock more to alternative assets like platinum.”īarrick Gold's stock soars after Warren Buffett's company buys a stake There is potential for more inflation as Powell talks about uncertainty and more stimulus,” said Ed Moy, chief strategist at gold seller Valaurum and a former director of the US Mint. “The Fed has pumped more money into the markets.
That should depress the value of the dollar. After bottoming out at just under $600 an ounce in late March, prices have rebounded to about $840.įed Chairman Jerome Powell has strongly hinted that the central bank is likely to keep interest rates at zero for several more years. (TSLA) and other electric vehicles (which don’t need catalytic converters), has hurt platinum demand.īut some commodities experts think that platinum might finally be ready to make a sustained comeback. The slump in auto sales worldwide, coupled with the rise of Tesla Platinum is a key component of catalytic converters in cars, which are used to reduce exhaust emissions. It’s not just a hedge against the dollar and something used in jewelry. So why has platinum lagged behind? One key reason is that it has more of an industrial use than other metals. And it should be good news for platinum bulls. It’s a reason why bitcoin has done well this year, too. So the bet is that metals will hold up better than the dollar and other major paper currencies, which tend to lose value when the Federal Reserve and other global central banks are keeping rates low. Most precious metals have benefited from the volatility that has resulted from the Covid-19 pandemic, a global recession, and concerns that Washington may not come to an agreement on more economic stimulus. Investors often flock to gold and other metals in times of financial uncertainty. Now experts are saying platinum may soon catch up with its flashier rivals. But platinum prices are down almost 15% year-to-date. Sometimes, metal is simply stolen from warehouses by criminal gangs in sophisticated heists - but it’s the threat of fraud perpetrated by industry insiders that tends to cause most concern.Gold prices have soared more than 20% in 2020, and they hit a new record high earlier this year. In other cases, a stretched trader might sell on the goods to which the lenders have a claim, without paying back the loan. These can be faked, using fictitious material, or a single cargo can be collateralized for multiple loans - often known as over-pledging. In metals, that collateral is often underpinned by paper records - warehouse receipts and shipping documents recording details like quantity, quality, ownership and location of the goods. Dealing commodities is typically a high-volume, low-margin business and merchants take out loans backed by the product they’re trading to fund purchases and optimize cash flow. The sector’s reliance on paperwork to back the shipment and storage of expensive cargoes makes it an easy target for wrongdoing. Risk and fraud stretch back through the history of commodities trading and there are several ways things can go wrong.
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