Buy platinum?

Discussion in 'Platinum' started by possum, Aug 30, 2012.

  1. possum

    possum Member Silver Stacker

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    I just got this from Money Morning

    On searching for platinum the cheapest i could find was ABC.

    Possum

    Why Platinum is a Screaming Buy
    By Martin Hutchinson, Contributing Editor, Money Morning

    You won't read about it in the mainstream news, but the South African mining industry is in the fight of its life. That makes one investment a screaming buy.

    You see, violent strikes have paralyzed several South African mines this year, including most recently the giant Lonmin platinum mine.

    This isn't a short-term problem, either, and it's not related to conditions in the mining industry.

    There's a deep political agenda at play, which means the disputes are likely to be a severe ongoing problem.

    But it's the story behind the story that has my eye. Because for investors who can grasp what this crisis really means, the seeds of opportunity are about to take root.

    Let me explain...

    Playing Political Football

    In this case it has to do with politics, or more accurately, radical left-wing politics.

    Even though it is a democracy, South Africa is effectively a one-party state. Since the opposition Democratic Alliance attracts voters primarily from the minority white and mixed-race communities, it has no real chance of dislodging the African National Congress from power.

    What's more, the country is very unequal, with one of the highest Gini (inequality) coefficients in the world.

    These days however, it's not just the whites who are rich. The ruling ANC bosses now have primarily business interests and are among the nation's richest people. Meanwhile the economy grows only sluggishly and unemployment is a towering 25%.

    As you might surmise, in this situation there's a lot of unrest.

    Caught in the middle is South Africa's mining industry, which has been a political football for two years now.

    But now a radical wing of the ANC is attempting to replace the current president, Jacob Zuma, in the next election.

    That's important because, in 2010 Julius Malema, then leader of the ANC Youth League and a leading radical, launched a political campaign to nationalize the mines.

    Zuma opposes this, as does the official National Union of Mineworkers. And even though Malema was expelled from the ANC in February, a discussion document advocating mine nationalization was only narrowly defeated at the ANC Policy Congress in June.

    Since then, Malema has taken his campaign to the streets, and has stirred up radical groups among the mineworkers to demand improved pay and conditions outside of the official union structure.

    This mix of radical union leaders combining with extremist political agitators in a society of extreme inequality, where the majority population has memories of oppression, has an analogue in history...

    And it's not in Africa.

    It's reminiscent of Czarist Russia before the 1917 Revolution that let in the Bolsheviks. Malema is essentially Lenin or Trotsky (at least he'd like to be) and the miners' union is the equivalent of the Petrograd Workers Soviet.

    That suggests that these troubles won't disappear anytime soon.

    Whether or not Malema succeeds in overthrowing South Africa's power structure (and the odds must still be against him), mine nationalization is very much a live issue, and industrial action by militant miners is a key tool for Malema's supporters in their efforts to achieve radical change.

    Here's where the payoff is for investors...

    Political Unrest Means a Steep Rise in Platinum Prices

    It's highly likely South African mine output will be heavily disrupted for several years to come - even if Malema's objective of mine nationalization fails (and my bet would be that's the one place where he will eventually succeed, as the current power structure adopts elements of his program to defuse opposition.)

    Like a disruption of oil supplies through the Straits of Hormuz, disruption of South Africa's output will raise prices of the commodities where it is an important producer.

    Traditionally, this would have meant gold, but today South Africa is only a medium-scale gold producer, accounting for about 12% of world output.

    However in platinum, South Africa accounts for 70% of world output, so even a halving of production over a prolonged period would bring a steep price rise.

    Platinum is a key ingredient in automobile catalytic converters; it is also, along with gold, palladium and silver, one of the four precious metals for which a substantial investment demand exists.

    Traditionally, it trades at a premium to gold, but in early August, before the latest outbreak of mine violence, platinum had been trading at a 17% discount to gold - the lowest relative level for 27 years.

    Analysts see platinum primarily an industrial metal, citing the substantial inventories of the metal in existence, especially in Russia. But what they don't realize is that those "inventories" are in many cases investment holdings, similar to those of gold or silver.

    Regarded as a precious metal, platinum is now in imminent danger of shortage.

    Like gold, it will benefit from the ultra-easy monetary policies of the Fed and the European Central Bank, both of which are expected to provide more fuel to the monetary fire next month.

    However, it also has the potential to soar in price, even beyond gold, as supplies are restricted by South Africa's politically-inspired industrial action.

    For investors, that leaves one clear economic winner. Platinum is a screaming buy right here.

    Martin Hutchinson
    Contributing Editor, Money Morning
     
  2. goldpelican

    goldpelican Administrator Staff Member

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    Would have been a better call a few weeks ago when it was ~$150 an ounce cheaper.
     
  3. possum

    possum Member Silver Stacker

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    Was it? damn.

    Never mind, if it is "going to the moon" as they say, no time like the present.

    I actually don't think i will be subscribing to them again. They do seem a little slow on their suggestions/predictions.

    Possum
     
  4. rbaggio

    rbaggio Active Member Silver Stacker

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    Check 1 thread back ;)
     
  5. SoapBox

    SoapBox New Member

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    I remember when the strikes first started happening in Africa, and the police there killed some of them, I told my friend to just watch, the prices are going to soar. He asked why I didn't put my money where my mouth was and invest in platinum... Great question... I should have because it went from around $1400 to $1700 within a matter of a few weeks... I could have $300 in my pocket haha oh well!
     
  6. heyimderrick

    heyimderrick Active Member

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    I've been of the opinion that Platinum is the best value in PMs for a little while now. I'm seeing more demand than ever at local shows. Dealers are having trouble meeting demand and the premiums to spot are definitely rising. I haven't added much myself simply because of finances, but if you can find it, for what you feel is fair, I'd be buying.

    This is an article I wrote back in June that briefly visits historical ratios that I think will help identify the best values when making a buying decision: http://seekingalpha.com/article/658611-precious-metals-are-on-sale-or-are-they
     
  7. Chillidog

    Chillidog New Member Silver Stacker

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    I offered a 1oz platniumpus (platypus) two weeks ago,cheaper then the dealers.
    No body was interested.
    I'm a happy little doggie that I still have it
     
  8. heyimderrick

    heyimderrick Active Member

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    Despite selling that Koala to you, I wouldn't be a seller of platinum now, or any time in the near future for that matter. Hold all you have.
     
  9. hem9

    hem9 Active Member Silver Stacker

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    its good that it is rare unfortunately it is not as liquid an investment as silver or gold.
     
  10. Holdfast

    Holdfast Well-Known Member Silver Stacker

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    You can find prices for the Platinum Platypus on Perth's web-site and.... how to purchase it.

    http://www.perthmint.com.au/metalprices.aspx

    Price of the 2012 Platpus Friday 19 Oct 2012 was:

    Sell $1,705.56

    Buy $1,519.92
     
  11. Ronnie 666

    Ronnie 666 Well-Known Member Silver Stacker

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    Why is Pt not moving with gold? Is this fear of reduced car production? Production in South Africa is down $10B and demand appears to be increasing ? Is this becoming the best buy of 2012???

    Pt/Au ratio is now >1.1

    Will we see a sudden panic buy and price rocket up ?

    Drop in prices of platinum pushes its demand by 40 per cent
    http://articles.economictimes.india..._platinum-prices-platinum-market-rajiv-popley
     
  12. spannermonkey

    spannermonkey Well-Known Member Silver Stacker

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    As I keep telling everybody !
    Platinum is an industrial metal , jewellers actually hate working with it ( a much higher temp is needed to work with it )
    So most of it goes into car exhausts systems .
    More & more cars are running hybrid systems so less & less pt going into cat converters.
    If the demand was actually there ,the price would have skyrocketed when the strikes in S.A started
     
  13. Ronnie 666

    Ronnie 666 Well-Known Member Silver Stacker

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    Precious metals vs monitory metals is so overdone !! We all know the story....blah blah.blah......

    This is a very rare metal ......and you know what? electrical cars and trucks are not going to replace petrol and diesel...anytime soon.
    Car production in China is ramping up and India I forgot.
    You know that generator you want to buy for when the grid goes down will soon need a catalytic converter
    as proposed by the Chosen One. http://titanenergy.com/smartpower/l...s-rice-neshap-generator-emission-regulations/

    They also want this retroactive ....haha....

    US and European production down - eastern production up.
    When there is no more Pt and Pd and Great Wall wants some watch the price
    This is exactly what happened to Pd....a few years ago...
    Estimates are that Russian Pd supplies will be out by early next year.
    Let me say again is this the best buy of 2012 ? It's a bad buy until one day it's the best buy...

    Platinum Mine to Cede 51% Stake to Zimbabweans > IGIHE ...Pt production is hitting the wall
    http://en.igihe.com/business/platinum-mine-to-cede-51-stake-to-zimbabweans.html
     
  14. Ronnie 666

    Ronnie 666 Well-Known Member Silver Stacker

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  15. BlackSheep

    BlackSheep Active Member Silver Stacker

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    It just might be Ronnie, I've been keeping an eye on the Pt chart and am almost at the point where I feel compelled to grab another few ounces. The Platinum to gold ratio is once again near record lows not seen since the early eighties, won''t stay there forever!

    I've also been googling away to find any extra info I can (which isn't much compared to Au and Ag which are pimped on literally thousands of blogs/ads etc) - the fact not many "gurus" talk about it also makes the contrarian in me want to get more :D

    Thanks for the link, interesting to read. Most articles I've been finding talk about the fairly significant interruptions to supply due to the SA troubles - those indians seem to have an eye for a bargain.

    So you'd rather invest in something when it's demand is at a peak? :eek:
    Personally I think the other way around works better and the time to buy is when there is an oversupply - given Platinums unique properties that won't last forever!

    If you're interested in new technology and where vehicles of the future may be going you might like to read this link:
    http://www.platinum.matthey.com/applications/fuel-cells/
     
  16. spannermonkey

    spannermonkey Well-Known Member Silver Stacker

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    Who says this is the bottom/top for platinum ,pt gets recycled from the auto industry ;)
    The price is too unstable for my liking
     
  17. Ronnie 666

    Ronnie 666 Well-Known Member Silver Stacker

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    Spanner lets not talk about unstable platinum - what about SILVER? Unstable = opportunity ??
     
  18. spannermonkey

    spannermonkey Well-Known Member Silver Stacker

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    NO
    This is all about PT !;)
    And silver gets recycled in a big way , & is used in many industries ;)
     
  19. goldpelican

    goldpelican Administrator Staff Member

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    It's a small snapshot, but probably half of the Pt sold through Gold Stackers is bought by manufacturing jewellers. Apparently Lady Fortuna just melts at the prospect of being wedded to diamonds :p
     
  20. Ronnie 666

    Ronnie 666 Well-Known Member Silver Stacker

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    Thanks for that GP - when we see Toyota buying Lady Fortuna then we all know the game is up !
     

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