Platinum prices, along with the related exchange traded fund, experienced their largest gain in over 13 months as improved conditions in Europe and China bolster demand, while large mining operations hit a 13 year low.
The ETFS Physical Platinum Shares (NYSEArca: PPLT) jumped 3.7% Thursday. Physical holdings in platinum-related ETFs hit a record 68.84 metric tons on Aug 6, with assets rising 50% so far this year. PPLT was up 1% on Friday morning.
“There are signs of improving demand and that coupled with supply concerns makes platinum very attractive,” Michael Gayed, the chief investment strategist at Pension Partners LLC, said in a Bloomberg article. “We are seeing the bullish sentiment return.”
Specifically, strong economic data shows German exports rose 0.6% in June from May while Chinese exports increased 5.1% in July year-over-year.
“Today’s strong economic data out of Europe and China is very bullish for platinum,” Adam Klopfenstein, a senior market strategist at Archer Financial Inc., said in the article.
On the demand side, China is the world’s largest platinum jewelry consumer, followed by European car manufacturers – platinum is used in auto catalysts to help reduce harmful emissions.
Global platinum production, on the other hand, declined 13% in 2012, and African mining operations will drop 1.6% this year to its lowest since 2000. Northam Platinum, which operates the world’s deepest platinum mines in South Africa, warned that strikes due to deadlocked wage talks could continue to weigh on operations.
Morgan Stanley projects that demand will exceed supply by 1.33 million ounces this year. Credit Suisse expects the deficit to last through at least 2016 while the CPM Group believes mines won’t meet demand for another decade. [Precious Metals ETFs: Platinum Could Outshine Gold]
Platinum futures were up 3.5%, trading around $1,490 per ounce.
ETFS Physical Platinum Shares
For more information on platinum, visit our platinum category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.