{"id":7418,"date":"2013-06-10T17:29:39","date_gmt":"2013-06-10T21:29:39","guid":{"rendered":"http:\/\/www.pgm-blog.com\/?p=7418"},"modified":"2013-06-10T17:29:39","modified_gmt":"2013-06-10T21:29:39","slug":"why-investing-in-platinum-palladium","status":"publish","type":"post","link":"https:\/\/www.pgmcapital.com\/nl\/why-investing-in-platinum-palladium\/","title":{"rendered":"Why Investing in Platinum & Palladium"},"content":{"rendered":"

\"platinum<\/a>\"Palladium-resize-380x300\"<\/a><\/p>\n

Dear PGM Capita<\/strong>l Blog readers,<\/p>\n

In this blog article we want to discuss with you why investing in Platinum and Palladium can be so lucrative and why some analysts and investment advisors nicknamed Palladium, “The Metal of the 21st Century”<\/p>\n

Platinum and Palladium are both precious metals, which together with\u00a0rhodium,\u00a0ruthenium,\u00a0iridium\u00a0and\u00a0osmium\u00a0form a group of elements referred to as the\u00a0platinum group\u00a0metals or PGMs,\u00a0which are very scarce, of which\u00a0Palladium and Platinum are respectively the 5th and 8th scarciest element in the Earth’s crust.<\/p>\n

In addition, platinum and palladium, as well as silver, are being used more and more as an industrial metal in high tech applications such as renewable energy production and as a catalyst in chemical conversion processes.<\/p>\n

The Automotive Industry:<\/strong><\/span><\/p>\n

Industrial demand for platinum and palladium comes mainly from the automotive industry. Modern cars are equipped with a catalytic converter\u00a0which converts up to 90% of harmful gases from auto exhaust such as hydrocarbons,\u00a0carbon monoxide, and\u00a0nitrogen dioxide\u00a0into less harmful substances like nitrogen,\u00a0carbon dioxide\u00a0and\u00a0water vapor.\u00a0Vehicles that run on gasoline mainly use a Palladium Catalyst while platinum catalysts are used the most for diesel vehicles.<\/p>\n

As the number of cars on the road increases, further cuts in pollution per vehicle are needed to keep improving air quality. Many governments in the fast growing emerging markets, are putting legislation in place to catch up with the standards already implemented in the US, Europe and Japan.\u00a0Catalytic converters are now also required in construction and agricultural equipment in many markets.<\/p>\n

The automotive and industrial demand for platinum and palladium are highly dependent on economic trends and the health of the major world economies. Despite the ailing world economy, Palladium has outperformed the U.S. “benchmark” the S&P-500, during the last three years\u00a0as shown in below graph.<\/p>\n

\"Palladium<\/a><\/p>\n

The blue graph shows the 5-year chart of the S&P-500, while the red one indicates the palladium price developments during the last three years.<\/p>\n

The Supply and Demand Picture:<\/strong><\/span><\/p>\n

Currently, 75 percent of all Platinum and Palladium produced on the planet comes from South Africa, which country also holds 95 percent of all known reserves of these two elements.<\/p>\n

How important this is for the price of both metals, became clear last year when the supply of both metals came under stress due to months-long strike in the South African mines, with the consequence that Platinum and Palladium rose to respectively USD 1734.00 and USD 781 per troy ounce as can be seen in the graphs below.<\/p>\n

\"Platinum<\/a><\/p>\n

\"Palladium<\/a><\/p>\n

The above 1-year charts of both metals, support our point, that the price of Platinum and Palladium is not being determined by the demand but by its supply.<\/p>\n

From below graph we can see how the total world supply of both metals is related to their demand as catalyst in the automotive industry.<\/p>\n

\"Palladium<\/a>These three graphs sustain our interest in both metals, specially in palladium.<\/p>\n

Furthermore, it is noteworthy that about 55% of all Palladium produced in the year 2012, has been used in automotive catalysts.<\/p>\n

Due to the ever decreasing supply of both metals, it is clear that we are on the verge of a supply crunch for both metals, with the consequence that their prices may shoot through the roof.<\/p>\n

Additioal important information:<\/strong><\/span><\/p>\n

Platinum:<\/strong><\/p>\n