All about the price of Platinum
I'm sure many of you have noticed the price of Platinum has skyrocketed on the open market. Five years ago, Platinum was trading at less than $800 an ounce, while today that number has shot up to almost $2200 an ounce.
Why is the price going up? There are three main reasons:
1) South African Mine Shutdown
First, the largest mine in South Africa has shut down due to "power shortages". They claim that for miner safety, they decided to shut down the mine in an act of pre-emptive philanthropy... or something. The sort of act that put several thousand people out of work, and drove the stockpile of Platinum from $1400 an ounce in mid-january to $2200 an ounce today in mid-february.
2) US Dollar Woes
All metals are traded in American dollars, no matter what market you're in. If you're trading in Hong Kong, Singapore, London, Paris or New York, your're still negotiating for precious metals in American Dollars. If the value of the American dollar fluctuates, the price of metal always follows in direct proportion, otherwise the exchange rate would make it favorable to purchase your metals with foreign currencies.
Say for example the value of the dollar stood at $1.85 to the British Pound and an ounce of Platinum was $2000 USD. That means that an ounce of Platinum is worth roughly 1081 British Pounds. If the dollar loses value and goes down to an exchange rate of $2.00 to the Pound, you can be sure that the price of Platinum will rise to around $2160 to equal 1081 British Pounds.
For many years Platinum did not keep up with inflation. New mining technologies made it easier to dig out of the ground and refine. The US economy was being artificially held afloat by a exploding real estate market, which is now starting to collapse in a serious way. When the dollar is strong, typically metal prices go down. All of this is finally catching up, all in one big swipe.
Be sure, if metal prices go down in the future, we will lower our prices. We will be offering a Palladium special for APUG members in the next day or two, so keep an eye out.