Commodities and platinum prices enjoyed a rebound last week that could be a sign of what is ahead for us in 2009. Many of the metals, including platinum, enjoyed price increases as the U.S. dollar fluctuates, and confidence in the greenback continues to fall.
Many investors are looking at platinum as a potentially great investment for 2009, as the price ratio to gold makes many think platinum is ready for a strong upward move.
What this means is two different indicators are being looked at to determine where things will go over the short and long term for platinum.
The first indicator is the demand side of the equation for platinum, the obvious industry being the auto sector, which isn't looking too good at this time in spite of the government bailouts used to shore them up.
It isn't known whether demand for platinum will be the determining factor in the price rising, even though it is very low.
One smaller but significant factor in the ratio between gold and platinum, is the rarity issue. There is about three times as much gold as platinum in the world, and that could determine some of the pricing for platinum in 2009 in relationship to gold.
Another player in the field is the strength of the U.S. dollar, which will definitely be under downward pressure for some time ahead, including 2009. All of the money promised by the variety of government bailouts ensure inflation is just a short step away, as the Federal Reserve ramps up its printing presses.
The reason this will happen is Sovereign Wealth funds and other funds are starting to move away from the dollar, as it is increasingly being looked at as an inferior currency. Foreign governments are no longer thinking of it as a place of refuge, certainty and safety.
China is already experimenting with using its currency internally as the way to exchange goods in certain wealthier provinces.
So for the long term the greenback looks bad and gold and platinum are looking pretty good. Gold will advance this year for sure, and platinum, if it moves in lock step with it, could bring solid returns for investors, whether it's moved by demand or the ratio of it to gold.
If it begins to move in the way it has historically, platinum could surge to high prices in 2009, making it a potentially great investment.
There has been a temporary lull in the commodities bull market, but that will only be for a short season of time, as demand for natural resources inevitably starts again. Platinum will mirror that move, and gold will continue to be a haven for investors looking for a place their money can be safe, as well as grow.
We need to continually monitor platinum futures and prices, now, and in the next couple of years, as it has the potential to surprise on the upside, and long term platinum should have a lot of upward movement, as the global economy eventually rebounds and demand skyrockets. Platinum has a lot of potential going forward.
Showing posts with label Platinum Gold Ratio. Show all posts
Showing posts with label Platinum Gold Ratio. Show all posts
Saturday, January 24, 2009
Friday, January 9, 2009
Platinum Prices and the Year Ahead
There are a couple of different takes on the importance of platinum as an investment over the next year.
Some think the downturn in the auto industry and the resultant decline in platinum demand will slow the pricing of the metal, while others look at the price relationship between platinum and gold, and think platinum will be the best performing metal in 2009.
Under normal conditions, it usually requires between 1.7 and 2.2 ounces of gold to buy an ounce of platinum. Today the two metals are very close in price, generating the idea it's at bargain levels.
On the demand side, today South African investment bank and asset manager Investec (INVP.L) cut its short- and long-term outlook for platinum, citing the uncertainty in the auto industry as the driving factor.
In a research note, Investec analyst Rebecca O'Dwyer said, "We see downside risk to the platinum price in the near-term, particularly if vehicle sales continue to decline in the first few months of 2009."
Revised numbers from the bank places platinum at $970 and ounce in 2009 and $1,350 an ounce in 2010. Original projections were $1,350 for 2009 and $1,675 an ounce for 2010.
Who's right? That will depend upon whether demand is the determining factor in why investors buy platinum. Metals should be an excellent investment in 2009, and the economic circumstances would do more to dictate why people invest in them, rather than demand.
What I mean by that is U.S. equities, bonds and treasuries aren't going to be the focus of investors, with the danger connected to the U.S. dollar and the misguided bailouts and increased government spending.
So metals should be one of the few promising safe and growth sectors going forward into 2009. That in itself could override the demand factor concerning platinum (assuming it does go down), and the price definitely could surge up as investors pour their money into metals, and specifically platinum.
Some think the downturn in the auto industry and the resultant decline in platinum demand will slow the pricing of the metal, while others look at the price relationship between platinum and gold, and think platinum will be the best performing metal in 2009.
Under normal conditions, it usually requires between 1.7 and 2.2 ounces of gold to buy an ounce of platinum. Today the two metals are very close in price, generating the idea it's at bargain levels.
On the demand side, today South African investment bank and asset manager Investec (INVP.L) cut its short- and long-term outlook for platinum, citing the uncertainty in the auto industry as the driving factor.
In a research note, Investec analyst Rebecca O'Dwyer said, "We see downside risk to the platinum price in the near-term, particularly if vehicle sales continue to decline in the first few months of 2009."
Revised numbers from the bank places platinum at $970 and ounce in 2009 and $1,350 an ounce in 2010. Original projections were $1,350 for 2009 and $1,675 an ounce for 2010.
Who's right? That will depend upon whether demand is the determining factor in why investors buy platinum. Metals should be an excellent investment in 2009, and the economic circumstances would do more to dictate why people invest in them, rather than demand.
What I mean by that is U.S. equities, bonds and treasuries aren't going to be the focus of investors, with the danger connected to the U.S. dollar and the misguided bailouts and increased government spending.
So metals should be one of the few promising safe and growth sectors going forward into 2009. That in itself could override the demand factor concerning platinum (assuming it does go down), and the price definitely could surge up as investors pour their money into metals, and specifically platinum.
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