Against rand,

Finweek English Edition - - COMPANIES & INVESTMENTS -

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

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