Platinum Might be the New Gold

Paper investors always flee to the safe haven of precious metals when inflation and a down economy strike. There is indeed uncertainty when it comes investing in paper stocks and bonds, even if stocks are improving. Certainly, if anything was learned from the great recession is that investing in stocks and bonds without a safety net is not the way to go. Many folks lost their shirt when the financial markets collapsed, because many did not have the safety net in place. Gold has lost favor as a hedge recently due to its drop in price. However, in 2014 investing in platinum may offer a sound replacement.

According to Forbes platinum is expected to be a stable investment in 2014. This is due to higher catalytic converter demand and ongoing supply problems in South Africa, and high demand and a shaky supply chain bode well for platinum investors. There were indeed significant supply problems in 2013 and this expected to continue. While prices for the metal fell in 2013, this was a more a result of sympathy selling due to gold’s price drops than factors on the ground.

Bart Melek, head of commodity strategy with TD Securities believes platinum will be at the very least more stable in 2014 with the possibility of real gains. Expect a stronger platinum market in 2014. It is expected the global economy will see some recovery and China’s economy is expected to again heat up in 2014. Mr. Melek is bullish on platinum.

Platinum has superior underlying fundamentals than gold at the present time, meaning platinum is expected to separate itself from gold sometime next year.  Expect platinum to average out around the $1600 per ounce mark. This is infinitely better than what most analysts are predicting for gold over the same period. While supply is always an issue when discussing platinum modest supply increases in supply are expected. However, this expectation will be underpinned by an increased catalytic converter market resulting from strong automotive sales.

HSBC also believes 2014 will be a strong year for platinum. They expect automobile catalytic converter demand to rise to 3.482 million ounces in 2014 from an estimated 3.242 million in 2013. This will help platinum to hit $1600 an ounce. Furthermore, China is experiencing an urbanization which means even more platinum will be needed.

Resource investing News says new emission rules will be going into effect in 2014 and 2014 in Europe, and will significantly increase the amount of platinum needed for Europe’s automobiles. This is welcome news for platinum investors because increased demand and a troubled supply line means spot prices go up. While gold may continue to struggle in 2014, expect platinum to be a solid replacement.

Not everyone believes South Africa platinum supply line will improve in 2014. One trader suggests that the supply may remain stagnant or even drop from 2013 levels, and unions will likely keep pushing for higher wages which dig into mine owner profits. However, mining supply issues are of great benefit to investors, because supply line troubles with increased demand means higher platinum spot prices. If gold as an investment has you worried, platinum may be just the ticket you have been looking for.

Gold and most precious metals took a hit in 2013 and many investors have returned to paper investments and the dollar. Yet, paper investments cannot be counted on to always perform. Both the dollar and stocks will dip, it really is inevitable. Yet, one precious metal may offer the hedge you need in 2014, platinum. This metal might just be the new gold.


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