Platinum is the world’s third most traded precious metal and the most traded element among the platinum-group metals. It is commonly used in several industries, including automotive. Another name that is used to describe platinum is white gold.
Thanks to the COVID-19 pandemic, which caused both an increase in investor demand for platinum as a precious metal and a lack in industrial demand from the automobile industry, 2020 was a year of record highs and record lows for white gold prices.
The price of silver has also increased due to its many industrial uses.
The platinum price reached a two-year peak in January before plummeting to a 17-year low in March.
Platinum’s price continued to stay above $1,000 per ounce in the first quarter of 2021, indicating that consumer interest for the metal remains high. With that in mind, here’s a quick rundown of white gold supply and demand trends, as well as a look at a few different ways to get started investing in platinum.
Platinum investing: Supply and demand
According to US Geological Survey data, South Africa is the world’s top platinum-producing nation, accounting for 75% of the global supply. In addition, the nation has the highest known deposits of platinum-group metals. Due to COVID-19 lockdowns, South Africa produced 120,000 ounces of precious metal in 2020, down from 133,000 ounces the previous year.
Over the years, variations in production from the world’s top platinum-producing countries have been regularly occurring.
According to the World Platinum Investment Council (WPIC), which publishes quarterly industry forecasts, platinum production will be at an all-time low in 2020 due to COVID-19-related mine closures and processing plant outages in South Africa, which will reduce new capacity by 18%.
On the demanding hand, the WPIC expected a 5% rise in demand in 2019 due to increased consumer interest; but, due to a supply glut going into the year, the demand growth did not result in a substantial increase in the price of white gold.
Last year, a drop in demand from the automobile, jewelry, and manufacturing sectors was compensated partly by increased investment demand.
While investment demand will fall back as the world recovers from COVID-19, the WPIC forecasts that automotive platinum demand will rebound by 25%, leading to a 3% rise in global platinum demand in 2021.
The automobile industry continues to be the world’s biggest producer of platinum since the metal is used in catalytic converters and vehicle exhaust systems.
Platinum investing: how to invest in white gold
Investors who think the above market conditions would result in a higher platinum price may be interested in investing in the metal.
There are several options to invest in white gold, the first to buy natural platinum bars or platinum coins from a bullion dealer.
The WPIC and BullionVault’s online physical platinum business, which is available 24 hours a day, seven days a week, is another investment opportunity.
It allows private individuals to purchase vaulted platinum at the same rates as institutional investors.
Physical platinum investors may also obtain exposure via the Sprott Physical Platinum and Palladium Trust (ARCA: SPPP). It offers physical white gold bullion market access while maintaining the versatility of an exchange-traded security.
Another way to invest in the platinum market is by exchange-traded funds, such as the ETFS Physical Platinum Shares (ARCA: PPLT).
The last way to invest in platinum is to buy stock in a white gold mining business.
Anglo American Platinum (LSE: AAL, OTCQX: AAUKF), Impala Platinum Holdings (OTC Pink: IMPUY, JSE: IMP), and Tharisa are among the largest white gold firms by market capitalization (LSE: THS).
One advantage of investing in a thriving mining business is that they are less likely to be adversely impacted by drops in the platinum spot price.
Profiling the world’s top five platinum-mining companies
Anglo American Platinum (ANGPY) – 2.05 million ounces
Anglo American Platinum Limited (ANGPY), headquartered in Johannesburg, South Africa, was established in 1995 and is the world’s largest platinum-mining group, with a 2019 production capacity of slightly more than two million ounces.
The corporation is a division of Anglo American, a mining conglomerate headquartered in the United Kingdom.
Anglo-American Platinum’s reserves are primarily concentrated in South Africa’s Bushveld Complex (which includes the world’s largest open-pit PGM mines, Mogalakwena, Mototolo, and Amandelbult) and Zimbabwe (Unki mine).
The majority of the extracted ore is refined at Anglo American Platinum’s 14 concentrators before being smelted at its three South African refineries.
Impala Platinum Holdings Limited (Implats) – 1.31 million ounces
Impala Platinum Holdings (Implats) is a South African firm with interests in the Bushveld Complex and Zimbabwe’s Great Dyke.
Implats, based in Johannesburg, was established in 1966 as a subsidiary of Union Corporation. Implats is the second-largest platinum-mining firm on this list, producing about 1.31 million ounces of platinum concentrate from mine-to-market operations in 2019.
Impala mine, located in South Africa’s North West region, is the most significant contributor to this production. It has more than 131 million attributable ounces of white gold in its natural resources.
Sibanye-Stillwater (SBSW) – 1.08 million ounces
Sibanye Stillwater Limited (SBSW), which was established in 2013 as a gold-mining firm with headquarters in Johannesburg, ranks third on top platinum-mining firms.
Sibanye’s platinum-producing capacity rose to prominence after acquiring Bermuda-based Aquarius Platinum in 2016 and London-based Lonmin in 2019.
The majority of the company’s white gold production comes from Lonmin’s leading plant, known as the Marikana mine, on the west side of South Africa’s Bushveld Complex and Aquarius’ Kroondal and Mimosa mines.
Northam Platinum (NHM)– 900,000 ounces
Johannesburg, South Africa’s Northam Platinum Northam Platinum Limited (NHM.JO) is an independent and integrated white gold group metals producer based in South Africa’s Bushveld Complex.
Its primary platinum facilities are South Africa’s Zondereinde and Booysendal mines, whose significant contributions increased annual platinum production to 900,000 ounces in 2019/20.
Northam’s three significant ingredients are platinum, palladium, and rhodium, sold to markets such as jewelry, automobile engineering, medical equipment, electronics, and heavy industries.
Norilsk Nickel (NILSY) – 700,000 ounces
Public Joint Stock Company Mining and Metallurgical Company Norilsk Nickel (NILSY), also known as Nornickel, is Russia’s largest mining company and the world’s largest manufacturer of palladium and refined nickel. It is also a top-ten copper manufacturer. In 2019, the company processed approximately 700,000 ounces of platinum.
Nornickel, established in 1993 and is headquartered in Moscow, Russia, extracts PGMs and other precious metals as byproducts from its Russian mines on the Taimyr and Kola Peninsulas, as well as mines in South Africa and Botswana.
It also has a presence in western Finland. Other mining operations of Norilsk Nickel include the extraction and refinement of gold, silver, cobalt, tellurium, and selenium.
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