Thoughts on buying platinum?

[JohnGalt]

Platinum also has a low market cap, there is not a lot compared with gold, and while it may be less pretty by some it weights more. All the gold in the world it's worth 75% of all USD, or 14% of a global currency I made up (with wonky formulas). And how much is worth platinum? It has the same value as Etherum, an internet currency that's not even backed by force. 

Edited July 4, 2021 by JohnGalt

[Spark268]

who is John Galt?

i think platinum has fallen out of favour in recent years because of its use in the much maligned diesel catalytic converters, with the standard petrol ones preferring to use palladium, and causing a squeeze in that market. This has gone one on for a while now, so factories should have had the chance to retool towards a much cheaper platinum.

if the reddit crowd turned to platinum, there would be a squeeze by the end of the month.

Squeeze or no squeeze, now's the time to buy low.

 

 

Edited July 4, 2021 by Spark268

[LawrenceChard]

21 hours ago, Spark268 said:

i think platinum has fallen out of favour in recent years because of its use in the much maligned diesel catalytic converters, with the standard petrol ones preferring to use palladium, and causing a squeeze in that market. This has gone one on for a while now, so factories should have had the chance to retool towards a much cheaper platinum.

if the reddit crowd turned to platinum, there would be a squeeze by the end of the month.

Squeeze or no squeeze, now's the time to buy low.

We published this page some time ago:

https://www.chards.co.uk/blog/is-it-platinums-time-to-shine/978...

although it fails to echo my thoughts, which I posted on TSF  at about the same time, that platinum was very cheap compared with gold.

We were probably too early, and may still be, be we have put our money where our mouth is, and retain a position in platinum which is long about 250 ounces.

We also offer options for UK or EU investors to buy it VAT free (storage in a Swiss vault).

https://www.chards.co.uk/blog/vat-free-silver-and-platinum/293

 

[HawkHybrid]

30 minutes ago, LawrenceChard said:

We published this page some time ago:

https://www.chards.co.uk/blog/is-it-platinums-time-to-shine/978...

although it fails to echo my thoughts, which I posted on TSF  at about the same time, that platinum was very cheap compared with gold.

We were probably too early, and may still be, be we have put our money where our mouth is, and retain a position in platinum which is long about 250 ounces.

We also offer options for UK or EU investors to buy it VAT free (storage in a Swiss vault).

https://www.chards.co.uk/blog/vat-free-silver-and-platinum/293

 

 

imo the linked analysis is too optimistic for the future of platinum.

my reasoning is this:

over 40% of platinum demand comes from catalytic convertors in cars.

if the uk(and other countries?) bans all new cars from being made with an internal combustion engine by 2030

then platinum could stand to lose a lot of that 40% demand. to make up the demand fuels cell cars (that use

twice the platinum as catalytic convertors) needs to make up 50% of all new cars beyond 2030. any other

market demand for platinum is likely too small an increase to make up for the shortfall of reduced catalytic

convertors unless their demand goes up by +50% or more of current demand. my guess is that many new electric

cars are going to use some of the cheapest batteries whilst still being practical to use. the dates are not fixed

but I'm thinking that the jury is out on platinums future until it becomes much clearer what is going to replace

the 40%+ demand that can potentially be lost over the coming decade.

 

HH

[LawrenceChard]

14 minutes ago, HawkHybrid said:

 

imo the linked analysis is too optimistic for the future of platinum.

my reasoning is this:

over 40% of platinum demand comes from catalytic convertors in cars.

if the uk(and other countries?) bans all new cars from being made with an internal combustion engine by 2030

then platinum could stand to lose a lot of that 40% demand. to make up the demand fuels cell cars (that use

twice the platinum as catalytic convertors) needs to make up 50% of all new cars beyond 2030. any other

market demand for platinum is likely too small an increase to make up for the shortfall of reduced catalytic

convertors unless their demand goes up by +50% or more of current demand. my guess is that many new electric

cars are going to use some of the cheapest batteries whilst still being practical to use. the dates are not fixed

but I'm thinking that the jury is out on platinums future until it becomes much clearer what is going to replace

the 40%+ demand that can potentially be lost over the coming decade.

 

HH

Have you ever looked at the price of platinum before catalytic convertors?

[Spark268]

50 minutes ago, HawkHybrid said:

 

imo the linked analysis is too optimistic for the future of platinum.

my reasoning is this:

over 40% of platinum demand comes from catalytic convertors in cars.

if the uk(and other countries?) bans all new cars from being made with an internal combustion engine by 2030

then platinum could stand to lose a lot of that 40% demand. to make up the demand fuels cell cars (that use

twice the platinum as catalytic convertors) needs to make up 50% of all new cars beyond 2030. any other

market demand for platinum is likely too small an increase to make up for the shortfall of reduced catalytic

convertors unless their demand goes up by +50% or more of current demand. my guess is that many new electric

cars are going to use some of the cheapest batteries whilst still being practical to use. the dates are not fixed

but I'm thinking that the jury is out on platinums future until it becomes much clearer what is going to replace

the 40%+ demand that can potentially be lost over the coming decade.

 

HH

this pretty much sums up the consensus view for platinum, and that's precisely what's priced into the current platinum price. 

When investing, it makes sense to buy low, not high. Platinum should be parity at least to gold.

 

 

 

[HawkHybrid]

51 minutes ago, LawrenceChard said:

Have you ever looked at the price of platinum before catalytic convertors?

past pricing is not an absolute indicator for future pricing. future pricing needs future buyers at that price.

the gsr used to be ~15:1 for millenia, but in recent decades(centuries?) it's averaged 40+:1

similar with salt, sugar and many others. if supply outstrips demand then prices can tank.

 

currently catalytic convertors makes up ~3 million toz of annual demand. current pricing is balanced to

current demand and supply. if fewer catalytic convertors are made then up to that 3 million toz has to

find a new buyer.

 

at this moment in time we simply don't have enough data to make a reasonable educated guess. I think

those interested in platinum should wait a few years and gather data on the early impact and trends

that electric vehicles would likely make on the platinum market. hopefully this can provide an insight on

what might happen by 2030 and possibly even beyond?

 

HH

Edited July 5, 2021 by HawkHybrid

[Spark268]

a word to the wise:

the death of the snail mail has been one of the biggest trends over the past decade. This coupled with industrial strife at the poorly Royal Mail caused it to drop out of the FTSE 100. Forums were full of people pointing out these trends which looked irreversible (such as the ones you've detailed) - and the share price was beaten to a low of 125p at March last year. Then, came along COVID and the rise of ecommerce, and its share price increased by a factor of 5 - granted, the story of postage is not as sexy as gamestop, cryptos or tech stocks, but its performance puts all of these to shame.

Going back to platinum: It is a small market, and even the smallest increase in demand, for any reason whether conceivable today or not, at the margin will easily cause it to smash its way past gold parity towards palladium-rhodium levels.  The previously large level (as % of annual production) of demand from cat converters has cooled significantly, and that's what has depressed the price. 

There must be a reason why Platinum is the highest tier of membership level on this forum, as elsewhere  

 

 

Edited July 5, 2021 by Spark268

[Arganto]

If it's unfavorable as an investment or savings vehicle, isn't as utilised as a quick buck money maker due to its potential volatility and if it may drop out of favour with industrial use what with the CAT situation then does anyone know why the purchase premiums over spot are so high? I can stomach 20-35% over spot for silver as the base price is so low and I personally see much potential in silver, but applying that type of premium to a metal with a much higher intrinsic price is totally off-putting to me (this is in the second hand market without VAT, premium + VAT is even more off putting). I was seriously considering a few ounces to start a mini stack not long ago but it just seems over priced. Maybe ELI5? 

Edited July 5, 2021 by Liam84
Autocorrect ballsed up my post

[Spark268]

premiums are high because supply of the actual metal is tight, presumably because its mostly tied up in cats 😛 

its more of a sleeper investment for the longer term.......

 

 

 

 

[HawkHybrid]

13 hours ago, Spark268 said:

this pretty much sums up the consensus view for platinum, and that's precisely what's priced into the current platinum price. 

When investing, it makes sense to buy low, not high. Platinum should be parity at least to gold.

 

 

 

the consensus seems to be that platinum should at least be priced as much as gold?

 

12 hours ago, Spark268 said:

a word to the wise:

the death of the snail mail has been one of the biggest trends over the past decade. This coupled with industrial strife at the poorly Royal Mail caused it to drop out of the FTSE 100. Forums were full of people pointing out these trends which looked irreversible (such as the ones you've detailed) - and the share price was beaten to a low of 125p at March last year. Then, came along COVID and the rise of ecommerce, and its share price increased by a factor of 5 - granted, the story of postage is not as sexy as gamestop, cryptos or tech stocks, but its performance puts all of these to shame.

investing is not about random bets in hope of sky high returns. it's about being able to grow your

investment within your risk tolerances.

 

have you calculated how much(in loss opportunity) it would cost you if platinum continues to be

priced at less than gold?

 

HH

[cliveb13]

14 hours ago, LawrenceChard said:

Have you ever looked at the price of platinum before catalytic convertors?

Hi @LawrenceChard & others 

here is the chart for Pt in $ over the last 50 years. Pre Catalytic Converters, Pt was much cheaper with a sharp fall from its all time high c. $2100 after the GFC 

I collect Au, Pt, Pd & Rh. Pt hasn’t been a good investment but I am not an investor. I have some nice pieces. Pd & Rh have increased 4-20x from my main purchases but the market is very thin. 
 

I’d say a new use for Pt has to be found or a major problem at several mines for Pt to turn into an investment. The mine company shares might do better & are tradeable but I hold Glencoe only in that sector & they are Cu not Pt. 

C 

 

[LawrenceChard]

1 hour ago, cliveb13 said:

Hi @LawrenceChard & others 

here is the chart for Pt in $ over the last 50 years. Pre Catalytic Converters, Pt was much cheaper with a sharp fall from its all time high c. $2100 after the GFC 

I collect Au, Pt, Pd & Rh. Pt hasn’t been a good investment but I am not an investor. I have some nice pieces. Pd & Rh have increased 4-20x from my main purchases but the market is very thin. 
 

I’d say a new use for Pt has to be found or a major problem at several mines for Pt to turn into an investment. The mine company shares might do better & are tradeable but I hold Glencoe only in that sector & they are Cu not Pt. 

C 

 

Fair enough, but in my earlier, longer, post about platinum, I majored on the gold:platinum ratio. Go back to before 2010, and platinum was usually at a higher price than gold.

[Spark268]

3 hours ago, HawkHybrid said:

the consensus seems to be that platinum should at least be priced as much as gold?

 

if that were the consensus view, then platinum would be priced as much as gold

3 hours ago, HawkHybrid said:

investing is not about random bets in hope of sky high returns. it's about being able to grow your

investment within your risk tolerances.

Absolutely - what are you proposing ?

I used a random example of royal mail as an example of Reflexivity (Wikipedia: https://en.wikipedia.org/wiki/Reflexivity_(social_theory)#In_economics) . Its where price movements impacts peoples view on the fundamentals and leads to a negative feedback loop. This is what's happening with platinum and the cat theory. Thank you for perpetuating it - its cheaper for the rest of us.

When one gives an example of a concept, you can indeed call it random. However, there was nothing random about the investment case for buying royal mail at £1.24bn -its property portfolio alone was worth more than that - however this is not the topic here.

3 hours ago, HawkHybrid said:

have you calculated how much(in loss opportunity) it would cost you if platinum continues to be

priced at less than gold?

I estimate the opportunity cost at being wealth preservation - you can't have all your eggs in one basket.

2 hours ago, cliveb13 said:

Pre Catalytic Converters, Pt was much cheaper with a sharp fall from its all time high c. $2100 after the GFC 

Platinum is also closely related to silver, in that the market is dominated by industrial use , and the platinum market is much smaller. History shows that when gold moves, silver outperforms it, but both are outflanked by platinum - on the way up and on the way down. 

 

 

Edited July 6, 2021 by Spark268

[HawkHybrid]

12 minutes ago, Spark268 said:

I estimate the opportunity cost at being wealth preservation - you can't have all your eggs in one basket.

are you saying that for someone who held platinum from 2012 until now the opportunity cost to

them was zero versus gold?

 

HH

[LawrenceChard]

39 minutes ago, Spark268 said:

if that were the consensus view, then platinum would be priced as much as gold

Absolutely - what are you proposing ?

I used a random example of royal mail as an example of Reflexivity (Wikipedia: https://en.wikipedia.org/wiki/Reflexivity_(social_theory)#In_economics) . Its where price movements impacts peoples view on the fundamentals and leads to a negative feedback loop. This is what's happening with platinum and the cat theory. Thank you for perpetuating it - its cheaper for the rest of us.

When one gives an example of a concept, you can indeed call it random. However, there was nothing random about the investment case for buying royal mail at £1.24bn -its property portfolio alone was worth more than that - however this is not the topic here.

I estimate the opportunity cost at being wealth preservation - you can't have all your eggs in one basket.

Platinum is also closely related to silver, in that the market is dominated by industrial use , and the platinum market is much smaller. History shows that when gold moves, silver outperforms it, but both are outflanked by platinum - on the way up and on the way down. 

 

Although a consensus view is just that, a view, and nothing more...

The Royal Mail example was good, thanks for providing it.

My, slightly simplistic, way of thinking is "buy when something is / seems cheap", but combined with "buy when the item is out of fashion" (rather like the Royal Mail example).

Also, I try to make sense of pricing, and spend much time thinking "what's happening out there", then think how is that affecting prices, are prices out of line / abnormal, if so, why? After multiple questions, thoughts, data input, I sometimes reach a conclusion. In this case, my conclusion is that platinum is much cheaper than I would expect it to be, with all or most factors included. Yes, I am aware of low catalytic converter demand in the past few years, and into the next few years, but I think the price drop, out-of-favour status of platinum is overdone, therefore I think it is considerable more likely to go up relative to gold and currencies, than stay level or go down further.

As it happens, last night I spent an hour or so looking at the international diesel car market. I had not realised that Europe was the major market for diesel cars. Apparently diesel car sales were as high as about 70% in Europe until dieselgate, they are now under 50%, but... Diesel car sales only constitute about 14% of the international market. Most Europeans are likely to overestimate the relative drop in platinum demand.

Also, most of the drop in platinum demand for catalytic converters is almost certainly factored into its pricing. In any market which is open for speculation, prices usually precede supply / demand factors.

I don't expect rapid price increases for platinum, as I suspect it will take considerable time for investors, particularly smaller ones, to realise that prices are low. Typically, the public and press wake up to price changes when they are very noticeably well under way.

I may be wrong.

I am also not trying to "sell" my opinion as investment advice, simply to state and explain my views.

I do also have about £200K+ invested in platinum, so I have put some money where my mouth is. It would be more, but @ChardsCoinandBullionDealer is trying to deal with long production and shipping timelines, by maximising its investment in popular gold and silver investment items, by buying what would normally be unnecessarily high stock levels. If demand drops or supply improves, this will free up spare cash, which we might then redirect into more platinum, rather than keep in in cash.

 

[Spark268]

21 minutes ago, HawkHybrid said:

are you saying that for someone who held platinum from 2012 until now the opportunity cost to

them was zero versus gold?

 

HH

they say a picture is worth a thousand words. Someone looking at the chart that Clive provided can say a thousand things, of which you've said one. Please don't attribute it to me though.

16 minutes ago, LawrenceChard said:

As it happens, last night I spent an hour or so looking at the international diesel car market. I had not realised that Europe was the major market for diesel cars. Apparently diesel car sales were as high as about 70% in Europe until dieselgate, they are now under 50%, but... Diesel car sales only constitute about 14% of the international market. Most Europeans are likely to overestimate the relative drop in platinum demand.

that's interesting, it could be due to the level of fuel duty compared to elsewhere, making fuel efficiency a bigger factor in purchasing decision. 

 

[LawrenceChard]

4 hours ago, Spark268 said:

they say a picture is worth a thousand words. Someone looking at the chart that Clive provided can say a thousand things, of which you've said one. Please don't attribute it to me though.

that's interesting, it could be due to the level of fuel duty compared to elsewhere, making fuel efficiency a bigger factor in purchasing decision. 

 

Yes, probably because the EU pursued a faulty green agenda. I too used to think we should use diesel as it was more efficient, meaning less fuel used, less imported, lower CO2 emisions, and was not fully aware of the particulate problem.

My main source yesterday was https://www.transportenvironment.org/sites/te/files/2017_09_Diesel_report_final.pdf, which looks as though it was commissioned or run by a green lobby group, but nevertheless presents much data in one big report. (I did not read it in its entirety).

Edited July 6, 2021 by LawrenceChard
typos

[Spark268]

 

have you seen anything with regards to the use of platinum in the production of hydrogen ?   

The science is still developing but i understand that fuel cell technology might be feasible for larger vehicles such as trucks, buses and trains + that the use of platinum is the most efficient way of producing hydrogen at the moment.

[LawrenceChard]

1 hour ago, Spark268 said:

 

have you seen anything with regards to the use of platinum in the production of hydrogen ?   

The science is still developing but i understand that fuel cell technology might be feasible for larger vehicles such as trucks, buses and trains + that the use of platinum is the most efficient way of producing hydrogen at the moment.

That's a very easy question for me to answer - no!

I have read some stuff about hydrogen fuel cells, but took little notice of production methods, Using platinum as a catalyst would not surprise me, though, from my old "O" level chemistry days.

[Spark268]

Unfortunately, I did GCSE Double Science, and the subject was not covered at all 😶

[Happypanda88]

Since the last post, the platinum spot price has dropped another £100, from around £800 to £700 (at the time of writing).

I am interested in the metal too, mainly because I don't have any in my collection.

I searched the forum to gauge how others view platinum and found this thread.

I like to buy a 1oz pt Britannia but will the price drop further !? 

Oh! decisions decisions !! 🤔

[KevinFlynn]

46 minutes ago, Happypanda88 said:

...

I like to buy a 1oz pt Britannia but will the price drop further !? 

Oh! decisions decisions !! 🤔

An ounce cannot hurt, but treat it as a speculative investment.

[Stuntman]

I'm buying more in my SIPP, using iShares Physical Platinum ETF (SPLT).

[sixgun]