“So what’s the outlook now? A good start is to compare the platinum price to the gold price. The received wisdom is that during periods of sustained economic stability and growth, the price of platinum will trade at around twice the price of gold. We saw that in the early part of this century (see the chart below, which shows the ratio of the platinum price to the gold price since 1999). That’s because when economic growth is strong, industrial demand for platinum is high compared to demand for gold. However, during turbulent times, demand for gold surges as people seek it out for its monetary, wealth-preserving value. Meanwhile, industrial demand falls, making platinum less attractive, so the ratio falls to about 1:1. We saw that at the bottom of 2008′s bust,” Dominic Frisby Reports From Money Week.

 

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“There is another specific issue to be aware of. As I noted earlier, most platinum comes from South Africa. So it’s very vulnerable to problems there, be they political or, as in 2007-8, energy-related. And South Africa’s energy problems are far from over. The infrastructure is just not there. So one trading strategy for the patient would be to hoard the metal, wait for the power to the mines to be switched off, then sell into the rally as the price spikes. But assuming that South Africa keeps the lights on for now, what’s next for platinum? That largely depends on whether you’re an inflationist or a deflationist. If you believe that quantitative easing has worked, and that we are just ten months into another period of sustained asset price inflation and a new secular bull market, then buy platinum. Even if you think that quantitative easing will destroy currencies and cause hyperinflation, you’d still do well to turn your cash into hard assets such as platinum. Then take it with you, along with your guns and tins, to your hide-out up in the hills,” Frisby Reports.

“But if you think that this rally is getting long-in-the-tooth, and that the next downturn is not too far around the corner, and that deflating credit will outweigh government money printing, then you should take profits on your existing platinum holdings. For those interested in getting exposure, the simplest way to play platinum is to buy the metal itself. You can do this through a bullion dealer or via one of the bullion vaults, such as Goldmoney. For shorter-term holdings, ETF Securities has exchange-traded products which track the platinum price, including ETFS Physical Platinum (PHPT),” Frisby Reports.

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ETFS Physical Platinum Shares (PPLT) To Begin Trading This Friday January 8th

The Securities and Exchange Commission approved a rule change in late December that allowing ETF Securities to proceed with the launch of the ETFS Physical Platinum Shares ETF (PPLT). The investment objective of the Trust is for the Shares to reflect the performance of the price of physical platinum, less the Trust’s expenses. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in platinum. An investment in physical platinum requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing and insurance of the metal. Although the Shares will not be the exact equivalent of an investment in platinum, they provide investors with an alternative that allows a level of participation in the platinum market through the securities market.

 

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