With our Australian Kangaroo 1oz pure platinum coin available from
today, we look at the history and drivers of the ‘third’ investment metal.
Compared to gold, the amount of platinum mined throughout history is
minuscule. Much rarer than gold, it’s estimated the entire stock would fit
inside the average living room.
Platinum was worked by pre-Columbian Americans to produce artefacts of a
white gold-platinum alloy. Because it proved difficult to separate from gold
nuggets, the conquistadors are said to have considered it a nuisance!
We know it today as a derivation of the Spanish term platina,
which literally translates as "little silver".
Offering investors the chance to acquire 99.95% pure platinum, The
Perth Mint has released its 1oz Australian Kangaroo Platinum Bullion Coin for 2019.
When platinum reached Europe in the 18th century it was hailed
as the eighth known metal - after gold, silver, copper, tin, lead, iron and
mercury.
Scientific study went on to list it as an element – one of the basic chemical
building blocks of matter. It is one of the so-called ‘transition’ metals
(others being gold, silver, copper and titanium) because it bonds easily with
other elements.
Denser and heavier than both gold and silver, platinum is extremely
malleable (easy to shape) and ductile (stretchable). Under normal conditions,
it’s also immune to corrosion.
Today, platinum is useful in a range of industrial, scientific and medical
applications. Chief among these is its role in automotive exhaust emission
control devices called catalytic converters. Platinum is particularly
effective at converting harmful emissions such as carbon monoxide and
hydrocarbons into water vapour and gases less damaging to the environment and
human health.
Accordingly, around 40% of global platinum demand has been used in auto
catalysts over the past five years. Meanwhile, jewellery accounts for the
second largest slice - nearly 30%. Strongly associated with love, it enjoys
particular esteem among buyers of engagement and wedding rings.
Historically, the price of platinum has tended to trade higher than gold.
During the past decade, however, this situation has been reversed. As a
measure of how many ounces of platinum you can buy with an ounce of gold, the
current gold-to-platinum ratio is around 1.4.
Will platinum revert to its traditional premium over gold?
Conventional wisdom suggests this should occur during periods of sustained
economic stability and growth. For those who keep an eye on the price of
platinum, declining supply from South Africa, which accounts for about 70% of
the world's production, is another critical factor.
