When markets opened on Feb. 24 — just as Russian President Vladimir Putin sent 190,000 troops across Ukraine's border — commodity prices blew a gasket. This was an across-the-board event impacting almost every market ... including platinum.
Soaring inflation and supply-chain bottlenecks have already lifted the price of this metal to multi-month highs.
And now the war — plus justifiably harsh economic sanctions against Russia — threaten to send it even higher.
Moreover, as the war cycles I've long been warning about converge, don't discount the possibility of a Chinese move on Taiwan ... or more hostile actions from North Korea and Iran as they sense weakness in the West.
The result: freight rates rising dramatically due to soaring insurance costs.
Affecting Platinum Prices
Like gold, silver and palladium, platinum is one of the world's rare metals. Its presence in Earth's crust is thought to be just five parts per billion.
Although gold is slightly rarer, humans have been mining it for thousands of years ... while Westerners only "discovered" platinum in the mid-1700s.
That's why aboveground supplies of gold dwarf the refined platinum available today.
In fact, it's so rare, all the platinum ever mined in human history could fit inside the average garage.
- And its extreme scarcity makes it a smart addition to an investment portfolio.
Most mining today takes place in Canada, Russia, South Africa, Zimbabwe, Australia and the United States.
The largest operations are the Russian Nornickel Kola MMC mine, located in Murmansk Oblast, and the Impala Platinum (aka Implats) mine in northwestern South Africa.
Platinum is one of the most popular choices for fine jewelry. Despite being softer than palladium, it's durable, extremely malleable and resists tarnish.
It's also an exceptional oxidizer of carbon dioxide, which is why it's used in catalytic converters ... especially for diesel engines, but also gasoline-powered vehicles where it often replaces palladium due to its lower cost.
- In fact, catalytic converters account for an estimated 50% of platinum demand each year.
Oversupply pushed platinum to an 18-year low of $558 an ounce in 2020. But then prices for the metal jumped to a 6.5 year high of $1,336.50 in February 2021.
Platinum struggled to make any significant gains in 2021due to COVID-19-related disruptions and shortages of automotive semiconductors.
- But demand from this sector is now forecast to grow 19% this year.
In fact, growth could be compounded by Chinese imports of the metal, which are rising as the country builds a strategic stockpile to meet emissions standards.
Another factor could be that the country may be building inventory at an attractive price for the hydrogen fuel space, as platinum is a critical component of fuel cells.
That's why consultancy firm Metals Focus is forecasting solid price momentum this year:
- "We expect platinum prices to post a gradual recovery over the course of 2022, in the process outperforming gold."
Back in October, I said platinum could rise first — before gold and silver in the near term. Lo and behold, that's just what it's done ...
Platinum's breakout above the resistance level of $1,000 in January was an important psychological signal. And it's now a major base of support. We're also above the trendline.
Then, events in Ukraine on Feb. 24 caused it to spike above $1,100 ... yet another bullish signal.
One way to play platinum's nascent bull market is via the Aberdeen Standard Physical Platinum Shares ETF (PPLT), which holds the physical metal. Shares recently traded at $104.53.
Another way to play the commodity craze is with my Wealth Megatrends service. I'm helping my subscribers lock in gains with more specific trade recommendations. For more information, click here now.
You could also buy the Sprott Physical Platinum and Palladium Trust (SPPP), which holds both physical platinum as well as palladium bullion.
Platinum coins and bars are also available from online dealers like Kitco Metals or Apmex. I don't personally benefit from any dealer suggestions.
Another option is to buy "allocated" platinum. You save money on shipping and insurance costs by having it stored in a vault with your name attached. (I wrote about the benefits of buying allocated gold here.)
Hard Assets Alliance offers 1-ounce bars. You simply choose where you want them stored … in New York or Salt Lake City. And you can have them shipped to you at any time.
My recommendation: Take advantage of any brief pullbacks in ALL precious metals. Then back up the truck and load up on more.
All the best,
Sean
