Platinum

Platinum’s name comes from the Spanish word “platino”, which means “little silver”. A very malleable, ductile, whitish metal which is extremely unreactive, platinum is considered to be a precious metal. In fact, it is one of the major precious metal commodities.

Unlike gold and silver, platinum has not been mined since ancient times. In fact, compared to the two mentioned precious metals, it is a fairly recent entry to the club.

That said, the first traces of platinum reach all the way back to ancient Egypt. Scientists assume however that the Egyptians simply did not know that there were platinum impurities in the gold they used.

Much later, during the 16th-18th centuries, the Spanish viewed platinum as a sort of impurity in their gold and as such, they threw it out.

Due to its aspect as well as physical and chemical characteristics, platinum is easy to confuse with silver.

While platinum is slightly harder than iron, its malleability and ductility are close to that of gold, which is outstanding.

As far as its uses go, platinum is preferred to silver and gold by jewelers in some instances. It is much more durable than gold, and while it does appear silvery, it does not tarnish like actual silver.

Platinum production

Most of the world’s platinum originates from Russia and South Africa. In fact, South Africa alone is responsible for around 80% of the world’s platinum production. Platinum is a much rarer element in the Earth’s crust than gold. Its overall concentration is estimated to be in the 0.005 PPM (parts per million) range. Indeed, its yearly mining production is much lower than that of gold as well.

That said, derivatives based on the metal have not been particularly attractive investment vehicles since the 2008 economic downturn. Investors were then scared away from platinum and it has failed to regain its draw since.

Much like silver, platinum is mostly obtained as a byproduct of copper and nickel mining and refining.

Platinum price drivers

The price of platinum is mostly driven by demand. Given that there is not much investor interest in the metal, most of this demand originates from jewelers and the auto industry, which uses platinum in vehicles’ emission control devices. Platinum is a great catalyst in chemical reactions, which makes it a prime choice in this regard.

In 2014, some 218 tons of platinum were produced, of which almost half ended up with the auto industry. A further 34% was turned into jewelry, and around 20 tons were used in the chemical/petroleum industry.

Unlike gold and silver, platinum does not really correlate to major currencies and/or interest and inflation rates.

Economic strife and uncertainty massively influence the price of platinum in a negative way. During periods of economic growth, the price of the metal can be twice the price of gold. It is however much more volatile.

In the wake of the 2008 crash, it ended up shedding some two thirds of its value.

Platinum is traded through futures contracts at the Chicago Board of Trade, the Tokyo Commodity Exchange and the New York Mercantile Exchange.