Why Platinum is lower than Gold?

[billjustbill]

I understood that ARA refinery has always only paid 80% when refining Platinum, so it's an 18% loss to start. With the economy down and the auto industry not using it as much for the Cat. Converters, I can understand some of why demand is down.

What's your take on why Platinum is now lower than Gold?

Bill

 

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[billjustbill]

No takers on this question?

 

[jim4silver]

No takers on this question?

Problem is there is no real answer that makes sense to me regarding your question. Conventional wisdom is that platinum is primarily an industrial metal and with economic problems and downturns in many locations, platinum is thus taking a hit. But personally I don't necessarily believe that.

Platinum is a precious metal like gold, and is supposedly far more rare. There is an estimated platinum world supply (below ground) that is 1/16th that of gold. Above ground the supply of platinum is very low. Right now the cost of production of an ounce of platinum is approximately 1700 per ounce. Thus, the current price of platinum is below the cost of production. Gold costs approximately 1000 per ounce to mine, but some mines have a lower and some a higher cost of production.

When the price of gold got close to platinum I stopped my dollar cost averaging in gold and started buying platinum. In hindsight, I would have done better to date buying gold instead. However, I know from talking to my coin dealer acquaintances that the supply of platinum is far below that of gold. I believe that once PMs in general start to move back up, platinum will pass gold again in value as it has done for most of the past 150 years. Platinum is mined in very few places relative to gold. South Africa has approximately 79% of all underground platinum reserves, there is some in Russia and a few other places throughout the world as well.

Jim

 

[billjustbill]

No takers on this question?

Problem is there is no real answer that makes sense to me regarding your question. Conventional wisdom is that platinum is primarily an industrial metal and with economic problems and downturns in many locations, platinum is thus taking a hit. But personally I don't necessarily believe that.

Platinum is a precious metal like gold, and is supposedly far more rare. There is an estimated platinum world supply (below ground) that is 1/16th that of gold. Above ground the supply of platinum is very low. Right now the cost of production of an ounce of platinum is approximately 1700 per ounce. Thus, the current price of platinum is below the cost of production. Gold costs approximately 1000 per ounce to mine, but some mines have a lower and some a higher cost of production.

When the price of gold got close to platinum I stopped my dollar cost averaging in gold and started buying platinum. In hindsight, I would have done better to date buying gold instead. However, I know from talking to my coin dealer acquaintances that the supply of platinum is far below that of gold. I believe that once PMs in general start to move back up, platinum will pass gold again in value as it has done for most of the past 150 years. Platinum is mined in very few places relative to gold. South Africa has approximately 79% of all underground platinum reserves, there is some in Russia and a few other places throughout the world as well.

Jim

Thanks, Jim.

Logic seems to follow facts, and that's what puzzled me with the current reverse of prices and what refiners charge to process platinum.

Bill

 

[manorman]

if things get bad people know what gold looks like and that it has has value, the normal person on the street would not know platinum from stainless steel, just my opinion.
Mike

 

[billjustbill]

if things get bad people know what gold looks like and that it has has value, the normal person on the street would not know platinum from stainless steel, just my opinion.
Mike

Now that you've brought out how the "Average Joe and Jo-Beth" knows what yellow gold looks like, I'll support your logical and well founded "Opinion" with a fact I'm experiencing at least every month of this year. I'll find more "White Gold" mixed in with costume jewelry than I do all of the 10kt, 14kt, or 18kt yellow gold.

Yesterday, I found a single small 14kt yellow gold earring that weighs 3/10 of a gram and a 14kt White Gold toe ring with what appears to be small diamonds that weighs 2.5 grams.

This time last year, I found 14kt White Gold chain and pendant with two diamonds in a tall, floor size, jewelry box I bought. Just a few weeks ago, I found a 3/4 carat diamond in a 14kt. White Gold pendant and matching chain.... Your point of what the average person knows about PM's is on target.

So, not even what very well may be a 1/2 carat, then a 3/4 carat, and a possible 1-full carat diamond, all found in garage sale jewelry, can make people think the "Silver" settings or chains could actually be gold or platinum.....

 

[manorman]

you did very good, and im sure alot of white Gold gets missed.
Mike

 

[jim4silver]

if things get bad people know what gold looks like and that it has has value, the normal person on the street would not know platinum from stainless steel, just my opinion.
Mike

If things get as bad as is often discussed, the average joe or person on the street is not going to be buying anyone's gold or platinum. They might try to mug you for yours, but they will be broke and not be going around buying PMs.

Those who would have the money to be purchasing PMs would most likely know the difference between platinum and other white metals.

Another idea that is often brought up is using junk silver to barter with in such an event. I believe that if things really get "that bad", it would only take a week or so before 99% of the population would be out of anything worth bartering with, such as food, water, etc. Those who had foresight and had a decent stock of "barterable" items would most likely hold them since replenishing their own supply would be difficult or impossible.

My view on the importance of PMs as investments or wealth protectors lies more in situations where the economy gets really bad (like we are headed now), but not so bad that you would have to even consider selling your PMs to/or bartering with them with the average joe to survive. If things get that bad (I call it Mad Max, even though that term might be a bit extreme), PMs would be better than paper dollars, but they would probably not help much until order was restored somehow by the government. In Mad Max, I don't think many would survive here physically or emotionally, since as Americans we have had it so great compared to the rest of the world for so long and most people would freak out if faced with such a situation and not know what to do, except maybe go out and riot and steal.

In a gov shutdown situation, those who have lived on gov assistance for generations would not be real happy, and would probably be out looking for a new source of sustenance- ie, looting, pillaging from neighbors, etc. Probably would not be a pretty sight.

Just my opinion.

Jim

 

[$ilver$urfer]

if things get bad people know what gold looks like and that it has has value, the normal person on the street would not know platinum from stainless steel, just my opinion.
Mike

If things get as bad as is often discussed, the average joe or person on the street is not going to be buying anyone's gold or platinum. They might try to mug you for yours, but they will be broke and not be going around buying PMs.

Those who would have the money to be purchasing PMs would most likely know the difference between platinum and other white metals.

Another idea that is often brought up is using junk silver to barter with in such an event. I believe that if things really get "that bad", it would only take a week or so before 99% of the population would be out of anything worth bartering with, such as food, water, etc. Those who had foresight and had a decent stock of "barterable" items would most likely hold them since replenishing their own supply would be difficult or impossible.

My view on the importance of PMs as investments or wealth protectors lies more in situations where the economy gets really bad (like we are headed now), but not so bad that you would have to even consider selling your PMs to/or bartering with them with the average joe to survive. If things get that bad (I call it Mad Max, even though that term might be a bit extreme), PMs would be better than paper dollars, but they would probably not help much until order was restored somehow by the government. In Mad Max, I don't think many would survive here physically or emotionally, since as Americans we have had it so great compared to the rest of the world for so long and most people would freak out if faced with such a situation and not know what to do, except maybe go out and riot and steal.

In a gov shutdown situation, those who have lived on gov assistance for generations would not be real happy, and would probably be out looking for a new source of sustenance- ie, looting, pillaging from neighbors, etc. Probably would not be a pretty sight.

Just my opinion.

Jim

Hi Jim,

Just wanted to say I love reading your posts! You have a great deal of knowledge and insight and I (and I am sure others) thank you for your continued contributions here!

HH,

$ilver$urfer

 

[jim4silver]

if things get bad people know what gold looks like and that it has has value, the normal person on the street would not know platinum from stainless steel, just my opinion.
Mike

If things get as bad as is often discussed, the average joe or person on the street is not going to be buying anyone's gold or platinum. They might try to mug you for yours, but they will be broke and not be going around buying PMs.

Those who would have the money to be purchasing PMs would most likely know the difference between platinum and other white metals.

Another idea that is often brought up is using junk silver to barter with in such an event. I believe that if things really get "that bad", it would only take a week or so before 99% of the population would be out of anything worth bartering with, such as food, water, etc. Those who had foresight and had a decent stock of "barterable" items would most likely hold them since replenishing their own supply would be difficult or impossible.

My view on the importance of PMs as investments or wealth protectors lies more in situations where the economy gets really bad (like we are headed now), but not so bad that you would have to even consider selling your PMs to/or bartering with them with the average joe to survive. If things get that bad (I call it Mad Max, even though that term might be a bit extreme), PMs would be better than paper dollars, but they would probably not help much until order was restored somehow by the government. In Mad Max, I don't think many would survive here physically or emotionally, since as Americans we have had it so great compared to the rest of the world for so long and most people would freak out if faced with such a situation and not know what to do, except maybe go out and riot and steal.

In a gov shutdown situation, those who have lived on gov assistance for generations would not be real happy, and would probably be out looking for a new source of sustenance- ie, looting, pillaging from neighbors, etc. Probably would not be a pretty sight.

Just my opinion.

Jim

Hi Jim,

Just wanted to say I love reading your posts! You have a great deal of knowledge and insight and I (and I am sure others) thank you for your continued contributions here!

HH,

$ilver$urfer

Thanks for the kind words $ilver$urfer.

Jim