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A Brief Look Forward at Platinum and Palladium in 2018

A Brief Look Forward at Platinum and Palladium in 2018

Back in September and October we ran two pieces on our other precious metals here at Bleyer, Platinum and Palladium. So, this week, we’re going to take a brief look at what the market commentators are expecting for the prices of these two very worthy contenders for your personal investment. Like Silver, they are both industrial as well as safe haven metals:

“The white metals of Silver, Palladium and Platinum are just as much about rising industrial production and global growth as they are about hedging against inflation or providing a safe-haven investment. For investors, the white metals can capture much of the upside in the global economy as well provide some downside protection in case the fudge really hits the fan. Investors should act quickly, though. (Investopedia)

Now, let’s take a quick look at both metals individually, then return to summarize their joint investment potential for 2018.

 

Platinum

As many of our readers are aware, Platinum is used both as an industrial metal in wire and electrical contacts, jewellery and catalytic converters. The two largest suppliers are South Afraica and Russia, together producing 60% of the world’s supply – another reason as investors to keep our eye on the Russian bear’s economic activity throughout 2018.

Platinum price is currently at £726 and enjoyed a high in 2017 of £831 and a low of £655, so tracking somewhat below Gold, although that is a disjointed comparison, in that one metal is industrial, the other purely investment - arguably even in its jewellery form.

It is worth noting quite clearly that the very factors that increase the price of Gold (geo-political tension, currency devaluation, natural disaster, war) have the potential to inversely affect the price of the predominantly industrial metal Platinum. So, as always, Bleyer encourage our readers to enjoy your own research as you become more familiar with this investment Precious Metal.

 

A graph showing the price in Platinum from 2017-2018

 

Palladium

Palladium’s uses include white gold jewellery, medical uses, dentistry and catalytic converters. So, again, it is crucial to keep an eye on these areas of industry and the attached markets, to gauge how Palladium’s price may fare.

Last year Palladium enjoyed a high of £867 and a low of £547, so marginally reaching a slightly higher high and lower low than its Platinum cousin.

But prices alone do not tell the whole story. Whereas the price of Palladium per ounce actually went up by 30% over 2017, Platinum went down by 11%. (Note: I have seen these percentages quoted as high as 50% and as low as 4% but cannot find the supporting figures for that. But either way, the pattern remains the same.) So, what do the commentators surmise of these quite different movement potentials, both as to why and how this might affect prices into 2018?

 

A graph showing the increased price in Palladium from 2017-2018

 

Looking Ahead through 2018 for Platinum and Palladium

“Palladium prices have even risen above platinum prices, something not seen since 2001. Why have palladium prices strongly outperformed platinum prices? For a start, the decline of market share of diesel cars in favour of petrol cars has weighed on platinum prices and this has supported palladium prices.

Moreover, palladium has a substantial supply deficit and this has bolstered prices. In addition, the environment is just right for palladium prices: strong global growth, strong increase in Chinese auto catalyst demand and positive investor sentiment.” (ABN AMRO)

And looking ahead, the consensus of this high-quality financial commentary believes “for 2018 we expect lower platinum prices” and a summary the three reasons given is:

  1. First, it is unlikely that Chinese jewellery demand for platinum will take off. In fact, it will probably remain under some pressure in 2018. Platinum jewellery demand is next to auto catalyst demand an important demand source for platinum.
  2. Second, expectations that diesel cars will lose market share will continue to weigh on platinum prices.
  3. Third, platinum prices have a tendency to weaken if US Treasury yields and the US dollar rise.”

But, as always, lower prices in Platinum may well mean an excellent buying opportunity in 2018. Bleyer recommend a balanced portfolio of a variety of Precious Metals. But, let’s take that view of Platinum’s potential upside further, with the ever stable commentary of Seeking Alpha:

"2017 was an excellent year for those bullish for palladium and a rough one for those looking for higher prices of platinum. Both of the platinum group metals experienced very different price action during the year that came to an end last Friday. [Currently] Palladium challenges its all-time high price. Platinum is cheap as dirt [therefore] 2018 could bring a reversion to the mean for platinum prices and how to position for higher platinum prices.”

I’d like to conclude with one of my favourite commentators over many years, Dominic Frisby from this week’s issue of Money Week. He succinctly agrees that Platinum is currently positioned to offer an strong investment opportunity for 2018 and expounds exactly why:

“Commodities started to wake up a bit in 2017, particularly energy and metals, but platinum barely moved at all. At around $975 per ounce, platinum is about three-quarters the price of gold. Platinum “should” trade at 1.25 times the price of gold – not at a discount. Fair value, and the historical norm, suggest a platinum price around $1,650. It is even trading at a discount to palladium, its sister metal. The historical average is two or three times the price of palladium.

Platinum is currently valued at its cost of production, or even slightly below. Current supply from mining does not meet demand – the gap between the two is met by recycling and scrap. This has been the case for several years now. Just a tiny increase in demand and this will be put out of balance. A change in the public perception of diesel engines and the environmental effectiveness of catalytic converters would help its cause enormously. But in a world where value is so hard to find, platinum stands out as cheap.”

 

Assorted investment palladium and platinum bullion available from Bleyer

 

Bleyer offer the option of investing in the following Platinum Coins, 1oz Australian Platypus, 1 oz Canadian Maple, 1oz Queen's Beasts Griffin or the 1 oz Queen's Beasts Lion. In addition, if you would like to receive even more metal for your money, with lower fabrication costs, browse Bleyer’s Platinum Bars of 1oz, 5oz, 100g, 250g, 500g, and 1k. Bleyer currently offer 50g, 100g, 250g and 1oz Palladium investment bars and a 1oz Palladium Canadian Maple coin. 

There are currently no Platinum or Palladium products on discount with Bleyer - however it is worth checking the Special Offers page regularly, as our pre-owned stock position can change daily. Call or email Bleyer now to discuss owning either and both of these two Precious Metals, to either hold or store: 01769 618618 or [email protected]

 

As assortment of Umicore platinum bullion bars available from Bleyer

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