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Precious Metals - Overview - Issue 1

Precious Metals - Overview - Issue 1

Platinum and Palladium: More Precious than Silver & Gold?

The following article is taken from Special Report from The Outsider Club with thanks. We present it here as an Introductory Overview of the Physical Metals market. Bleyer Bullion will be producing individual reports and news articles on each of the metals over the coming weeks as follow-up. But for now we hope you find this an interesting and informative overview, particularly of the lesser known cousins of Gold and Silver. If you have any questions please contact one of the Bleyer Team or myself, Caroline Peers, CEO of Bleyer, directly on 01769 618618.

"The precious metal hierarchy goes something like this...

Gold is essentially the "Perfect 10" of precious metals.

It's the ancient metal of kings and a precursor for currency. Once upon a time, gold was the basis for sound money. Gold has long been a measure of wealth, and it is still coveted the world over for jewellery and as a store of wealth.

Throughout history, people have literally travelled to the ends of the earth in search of the yellow metal: European explorers and conquistadors flocking to Mexico and the New World in search of cities made of gold... American pioneers crossing the continent in covered wagons to prospect in rivers in uncharted territory... and bands of pirates crossed oceans to find and bury chests filled with gold coins.

Next up is Silver...

Silver is often said to be gold's ugly sister. Perhaps not as aesthetically pleasing as gold, silver is much cheaper to gain exposure to — and is quite possibly a better long-term investment than gold.

Throughout history, some 1,411,475 tons of silver have been mined (so it's not exactly "rare"), while only 161,000 tons of gold have been mined in total (enough to fill two Olympic swimming pools).

Two much rarer metals often fly under the radar: Platinum and its close cousin, Palladium.

Precious Metal Alternatives

Platinum is much rarer than both gold and silver — so rare, in fact, that all of the platinum ever mined could probably fit into your living room.

And palladium is even rarer than that...

Unlike gold, these metals derive much of their value from industrial uses. After watching gold and silver be beaten down over the last year, it may be high time to check out the “other” precious metals. After all, supply is tight — and only getting tighter.

The vast majority of platinum comes from South Africa, where impediments to mining it have a strong impact on the spot price. These impediments have been coming fast and furious. Last year, South African miners took part in violent protests over wages, which left dozens of miners dead and uncertainly looming large.

Since the platinum mining margins were already tight, these events pushed Anglo American Platinum to shutter four mine shafts and sell off one of their mines, killing off 14,000 jobs and causing production to take a sizable hit. According to management, they could not turn a profit, despite platinum's strong industrial fundamentals.

"The platinum business has attractive underlying fundamentals, but we are facing tough decisions to restore profitability to our operations. We must evolve to align the business with our expectations of the platinum market's long-term dynamics and address the structural changes that have eroded profitability over time," Chris Griffith, Anglo American Platinum's Chief Executive, said in a statement.

As far as price goes, it's all about supply and demand — and the demand depends a lot upon the auto market, since platinum is used primarily for catalytic converters.

Demand is likely to increase alongside the rise of emerging markets, especially in China.

China is now the world’s fastest-growing market for automobiles. Production reached 16 million units last year, surpassing the United States as the world's largest auto producer. And the Chinese are going to need plenty of platinum for all those cars...
 
Platinum prices reached parity with gold earlier this year and have now settled around $1,500.

Buying bars of platinum can be rather costly, so a more accessible way to gain exposure to platinum is with the ETFS Physical Platinum Shares (PPLT), which is backed by physical bullion.

Palladium is even rarer than platinum, and certainly less talked about. But it may be due for a breakout year in 2014...

Palladium has been slowly replacing platinum as a lower-cost material for catalytic converters for the past two decades, since it can basically perform the same function as platinum — at half the cost.

“The fact that there is a very strong possibility that automakers will dump platinum for palladium is reason enough to buy the metal. The last time this happened, palladium went to the moon,” according to Annuity IQ.

Palladium recently hit a 14-year high and is now around $909.  As with most precious metals, buying the physical product is the safest way to ensure the metal you bought actually exists in full."

Our clients who own palladium have seen the value of their holding increase by 17.29% in the last 12 months and 205% in the last 5 years.

There is nothing more secure than personally owning physical metal.  We consider it preferable to the EFT Market, where there is always more paper than the real thing.  If you want to know more about holding your own Physical Metal we save you money and discount your purchasing costs using our secure off-shore storage facilities.  Our approachable team are available during business hours, to chat online or talk on the phone 01769 618618.  Alternatively, if you know what you want or have bought from us before, please enjoy visiting Bleyer's brand new website, which now includes a quick and straight-forward online basket.  To access full benefits we recommend you take a few moments to register on our site.


We look forward to doing business with you soon.

With warmest regards

Jennie


Sales and Research Consultant, Bleyer Bullion

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Comments
9/2/2014 12:45 PM
When I started investing in precious metals, back in 2007, I decided to mix my metals and bought silver, gold and palladium.  I stored my metals at our Channel Island vault and avoided the VAT, leaving me free to chose on their merits alone.  At that time palladium was a metal I hadn’t come across.  My supplier told me of the interesting properties of this commodity and I also did my own research.  I discovered that this rather uninteresting looking metal was actually quite rare, there was not very much of it on the planet, it is difficult to mine and that it is used increasingly in new and emerging technologies such as battery cell technology and catalytic converters.  The price had rocketed to over $1000 an ounce around the year 2000 and it was then trading at $340 an ounce – equivalent to £166.20.  It was then in the doldrums for a few years and then the price started to move.  It jumped over the £500 mark in 2011 then took a dip before it rose to £450 and stayed about there for what seemed ages until recently when it has started a new climb.

Last year, I needed to free some capital and was forced to pick a metal to sell.  Although I didn’t want to get rid of any of it, I decided to sell the palladium as it had the greatest net increase from when I’d purchased, as opposed to silver and gold.  I was definitely glad that I had diversified my portfolio.  I sold having almost trebled my original investment :)