History of Platinum

Historically and presently Platinum exists in very limited supply with just two regions providing the majority of the supply for the entire world. The two regions are South Africa (approximately 60%) and Russia supplying and additional 30%.

In total terms approx 130 to 140 tons of pure platinum is mined per year worldwide which is less than 5% of gold production and 1% of silver production. Being a relatively scarce, but critical metal, the demand for platinum is very high and estimates are that if platinum mining ceased today, all the above ground reserves would only last about 1 year. In contrast to gold the reserve would last for at least 250 years.

Similar to gold and silver, platinum's huge price increases during the late 1970's and early 1980's resulted in a huge number of investors buying the bullion across Europe and the United States. Due to it’s industrial properties Platinum’s price is traditionally more volatile than gold. When we have sustained periods of economic stability and growth, the platinum price tends to be as much as twice the price of gold, whereas during periods of economic uncertainty the price tends to decrease. This is due to reduced industrial demand and can fall below the price of gold. Traditionally platinum is not only used creatively in coins and jewellery, but is essential in many industries such as petroleum, hard disk drives, anti-cancer drugs, fibre-optic cables, LCD displays, eyeglasses, fertilizers, explosives, paints and pacemakers. These amongst others, all rely on platinum.

Platinum is also the key catalyst used in fuel cells and has been a source of increased demand over recent years. This is why the US Government regards it as a strategic metal in it’s role in the defences, medical and telecommunications industries. Presently more than 50% of the annual platinum production is being used by the automotive industry due to it being the primary element in autocatalysts controlling vehicle exhaust emission. Autocatalysts convert emissions into less-harmful carbon dioxide, nitrogen and water vapour. While Western demand for automobiles has recently dropped, demand for vehicles in China and India is growing exponentially. Demand for “greener” cars and the demand of this autocatalyst from China and India and other developing nations would appear to be set to increase making platinum an attractive asset class to add to your investment portfolio.