Inelastic supply and demand mean that structural deficits such as we are currently observing tend to be persistent, leading to large price adjustments.
“For supply and demand to equilibrate, we need to see the price of platinum rise to the point where it induces additional supply and/or ensures demand destruction.
I believe we are some way off this point.”
Where do you see the platinum price needing to get to ?
To me the jewellery substitution effect would need $2000 platinum price, maybe more at the current gold spot. However I see gold at $4000 in the next 6-12months so perhaps $3k platinum in that time frame
Gold goes to US$4,000/oz and the gold-to-platinum ratio goes to 0.75 so platinum goes to US$ 3,000/oz.
The thing is, the 6E PGM basket acts as a break on the price signal to miners, recycling is governed largely by auto recycling, which is going to have nothing to do with the XPT price, and the price of XPT used in catalytic converters, medical devices, glass etc is such a small share of the total cost, and its absolutely essential. So they just pay.
Its late here 10pm, but I will put a comment on Notes with the long-run chart in real log terms and some comments tomorrow...
Thanks Peter, I appreciate your reply. FYI, I own quite a lot of physical platinum but very little in pgm miners. Do you see an investment attractive in that space & if so is there one which tickles your fancy?
Just turning in for the night now after watching Powell. Congratulations on being quite long Platinum. Its one of those trades that everyone hates until it moves, then everyone says, how could it have moved so far. I had a small exposure since 2021, but scaled up in February and again in May. Will follow up tomorrow.
“For supply and demand to equilibrate, we need to see the price of platinum rise to the point where it induces additional supply and/or ensures demand destruction.
I believe we are some way off this point.”
Where do you see the platinum price needing to get to ?
To me the jewellery substitution effect would need $2000 platinum price, maybe more at the current gold spot. However I see gold at $4000 in the next 6-12months so perhaps $3k platinum in that time frame
Hi Patrick,
Yes, I agree with you.
Gold goes to US$4,000/oz and the gold-to-platinum ratio goes to 0.75 so platinum goes to US$ 3,000/oz.
The thing is, the 6E PGM basket acts as a break on the price signal to miners, recycling is governed largely by auto recycling, which is going to have nothing to do with the XPT price, and the price of XPT used in catalytic converters, medical devices, glass etc is such a small share of the total cost, and its absolutely essential. So they just pay.
Its late here 10pm, but I will put a comment on Notes with the long-run chart in real log terms and some comments tomorrow...
Thanks Peter, I appreciate your reply. FYI, I own quite a lot of physical platinum but very little in pgm miners. Do you see an investment attractive in that space & if so is there one which tickles your fancy?
Just turning in for the night now after watching Powell. Congratulations on being quite long Platinum. Its one of those trades that everyone hates until it moves, then everyone says, how could it have moved so far. I had a small exposure since 2021, but scaled up in February and again in May. Will follow up tomorrow.
I'll take a look and get back to you. There's not much choice…
Do we see a catch up by palladium to platinum ? Having largely tracked each other this year…since mid May platinum has done 20 reels on palladium.