Platinum may well be emerging as t he ideal rand hedge to replace gold, which suffered a 28% rout last year as investors pulled out of bullion in favour of stocks and dollar-denominated assets on signs t hat t he US would begin easing its unprecedented monetary stimulus measures
hile the debate is still raging around the gold bull run, which saw it surge more than 600% from early 2001 to an all-time high of $1 923/oz in September 2011, there appears to be much more consensus among analysts that platinum is likely to fare pretty well over the next few years. Now you may be asking ‘why?’ given the ongoing labour woes at South Africa’s platinum mines, which account for about 75% of the precious metal’s global supply.
Part of the answer is that because SA is so crucial to global supply, any disrup- tion in production at local platinum mines typically results in higher prices of the commodity even as it hurts the share price of the miners. Images of striking platinum workers may cause investors to shy away from buying shares in those mines, but it also reminds them of the perpetual shortage of platinum on global markets. That makes physical holdings.of the metal all the more valuable.
At the time of writing platinum was trading at around $1413/oz, roughly $84 above the four-year low that it reached in December. So while it’s up about 13% so far this year, it’s still at relatively cheap historic levels, which could make right now a good time to take a punt on platinum if fundamentals in the sector play out the way most analysts anticipate.
Output from local platinum mines is already near t he lowest i n 12 years (around 4.1m oz) thanks to the continued