Hedging bets with platinum and gold
the top but he suggested that the price relativities today meant I could get a premium-quality metal for around the same price as gold.
Then I noticed a Forbes article with the headline ‘‘Gold becomes pricier than platinum, that’s rare and scary’’. The article noted that the gold price has risen more than 130 per cent in US dollars since the global financial crisis but that platinum has done better still.
It said that platinum should be priced at a premium to gold because although the two metals’ scarcity is about the same, platinum is more difficult (and therefore more expensive) to extract. Also, platinum is more useful than gold – one third of annual output is used in industry and another third is used to make catalytic converters in car exhausts. By comparison, 85 per cent of global gold demand is for adornment or as a store-of-value (when people get nervous and prefer gold bullion to bank notes). volume. But then, many would suggest that minting a large platinum coin to repay debt is no different to printing millions of dollar notes, which the Federal Reserve has been happy to do.
So, how is one to interpret these signs?
Arguably, if we are heading for scary times and another recession, I should get my ring made in gold because it will hold its value better than platinum. But minting a trillion-dollar platinum coin would take out more than 10 per cent of annual platinum production, creating scarcity and therefore pushing the metal’s value up.
And of course, Treasury might not stop at $1 trillion – why not mint enough coins to cover five years’ worth of debt repayment?
Think I’ll get a bit of both – what a nice way to hedge a bet.