The weakness in gold is making its way to other precious metals and the related exchange traded funds. That includes platinum and the ETFS Physical Platinum Shares (NYSEArca: PPLT).
With Friday’s loss, PPLT slumped by about 6.5% last week, extending its monthly loss to nearly 5% and its year-to-date loss to over 16%.
“Platinum prices tumbled to 10-year lows as the collapse of Turkey’s lira rippled through markets and weakened the currency of top producer South Africa, underlining persistent oversupply of the autocatalyst metal,” reports Reuters.
On the demand side, platinum will continue to enjoy robust industrial demand. Additionally, platinum jewelry is starting to enjoy a jump in demand as well, especially among the Millennial generation – younger generations in traditional gold-centric economies like India saw 2017 platinum jewelry sales jump 25%, according to Platinum Guild International.
Getting Bearish on Platinum
“Once much more valuable than gold and palladium, platinum has tumbled 25 percent from January highs to below $780 an ounce. This week it hit its lowest since October 2008 and a new record low relative to gold,” according to Reuters.
Platinum could also face pressure due to renew political pressure on diesel technology, a primary end market for the metal.
“Analysts at Metals Focus expect a surplus of 40,000 ounces in 2018 in the roughly 8 million ounce a year platinum market. Johnson Matthey predicts for this year a larger oversupply of 316,000 ounces, the biggest since 2011,” reports Reuters. “The average production cash cost in South Africa – a measure of direct expenses such as labour, fuel and electricity – was $834 an ounce last year, according to Metals Focus.”
Data suggest professional speculators with short bets on platinum outnumber longs for the first time in 17 years. PPLT resides more than 15% below its 200-day moving average.
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