Finweek English Edition

THE PRICE OF PLATINUM

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Redemption­s of platinum-backed exchangetr­aded funds (ETFs) in SA totalled 173 000 ounces in the second quarter, according to a report by the World Platinum Investment Council released early September.

An undisclose­d portion of the funds were shifted into JSE platinum group metals shares, said head of research at the council, Trevor Raymond, in an interview. “I wouldn’t call it a flight exactly, but earnings for the companies have been exceptiona­l,” he said.

Implats has announced resource extension projects but they will be slow to implement, said Raymond. “So, you’ve got to think that dividends will be paid out,” he added.

The price of platinum gained a third – about $300 per ounce – between January and February and then lost $100 per ounce to bob just over $1 200 per ounce until May whereafter it has steadily weakened. At $975 per ounce the metal is worth less than its January start.

Raymond said there was rapid destocking of metal inventorie­s, mainly by Anglo American Platinum in the second quarter that affected all PGMs, with platinum least affected. “There’s a disconnect between the platinum and palladium price (the latter now trading at $2 198 per ounce) that needs to be addressed and I’m not sure why platinum is worth less than gold.

“There’s no reason why platinum shouldn’t move back into a premium to gold (trading at $1 802 per ounce at the time of writing).” One expectatio­n is that expensive palladium autocataly­sts will be made from platinum in the future. It’s widely forecast – Sibanye-Stillwater CEO Neal Froneman feels it is inevitable, but it’s yet to manifest in the metal’s price. ■

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