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It's more than "interesting" that platinum
prices are lagging gold...
GOLD has risen nicely since the
meltdown following Lehmans' collapse, with the gold
price in Dollars rising 130%. Until last summer, however, platinum had done
better still.
Indeed,
a trader "could have made a lot of money buying platinum and selling
gold since Lehman Brothers," as Philip Klapwijk,
executive chairman of GFMS said Wednesday, taking analyst questions after
launching the precious-metals consultancy's new Gold Survey 2012 at Thomson Reuters' HQ in London.
Over
the 34 months to August 2011, the white metal rose 150%, recovering faster at
first even than the gold price. But it needed to, however, after dropped
two-thirds of its Dollar price between March and December 2008.
Since
last summer, platinum has slipped faster than gold. More notably, it's
slipped below the gold price itself – something seen for only three
trading days in December 2008 in the immediate aftermath of Lehmans' bankruptcy. And before that, you have to go back to
the recession of 1991...the peak of the "strong Dollar"
disinflation of 1984...the global stock market's once-in-a-generation low of
1982...and gold's big tops of Jan. 1980 and Dec. 1974 to find platinum
trading cheaper than the gold price.
Gold's
latest incursion above the platinum price is "interesting," said
GFMS's Klapwijk on Wednesday. But scary might be
closer to it. Running for 145 of the last 172 trading days, it's getting to
be something of a habit, too.
"There's
a case to be made for the white metal being priced at a premium to
gold," as Klapwijk said. The two metals'
scarcity in the earth's crust is about the same, but platinum deposits tend
to be more diffuse, making extraction more costly. On the demand side, it is
clearly more "useful" than gold too, with one third of annual
output going to industry and another third going to make auto-catalysts
according to platinum experts Johnson Matthey.
Fully 85% of global gold demand, in
contrast, is for store-of-value or adornment. And there's the rub.
The
vast majority of investors will always prefer gold over platinum, as Klapwijk noted this week, because its store-of-value use
is so very much greater than platinum's. You could ascribe that to 50
centuries of habit, gold being "the universal prize in all countries,
all cultures and in all ages," as physicist and polymath Jacob Bronowski put it in his Ascent of Man.
Today that history is supported by the second, stronger point which Klapwijk made Wednesday: gold's relative lack of
industrial use. That makes it a far better defense
against the kind of economic turmoil suffered since our financial crisis
broke in mid-2007 (platinum up 24%, the gold price up 153%), as well as the
economic crises of the mid-1970s and early '80s.
Over
the last 9 months in particular, Europe's economic crisis has affected its
vehicle demand, GFMS points out. That means lower demand for diesel engines
and thus platinum-based catalysts worldwide. Gold may have suffered similarly
lower demand amongst Western jewelry consumers, but
Eurozone investors have stepped in to pick up that slack. And their
counterparts in Asia are buying gold with both hands, according to GFMS's new
Gold Survey 2012, along with pretty
much anyone else who cares to look.
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