The World Is Quietly Running Out of Platinum
For the first time in history, you can buy investment-grade bars of platinum on TikTok...
This might sound like a bad marketing stunt. But the precious metals market goes where the demand is... And right now, platinum demand is soaring.
Last month, the World Platinum Investment Council reported that Chinese consumers are buying gold's "big brother" at a record-shattering pace.
Chinese investment in platinum bars and coins soared 140% in the past year. And that helped fuel a 10% move higher in global platinum demand...
Chinese investors are frantically buying physical platinum. And it could be the catalyst to kick off a long bull run for the metal. Here's why...
Gold's Big Brother Is Ready to Rally
Platinum has required saintly patience from its buy-and-hold investors...
The metal has stubbornly refused to join the precious metals rally. Since 2016, platinum has returned just 21%... while gold has returned about 197% in the same period.
But today, gold's big brother looks poised to take its revenge...
We already discussed how cultural values around the metal are changing in the East. Chinese commodity investors have noted the massive valuation gap between gold and platinum. And they're buying the latter hand over fist.
On top of that, platinum is headed for a generational supply crisis. We can see this by looking at the metal's supply-demand balance...
This metric takes the number of platinum ounces the globe uses each year, subtracted from the current stock of platinum mined worldwide.
Based on this metric, the global economy has been running at a platinum deficit for the past three years. Take a look...
Miners have failed to replenish the platinum supply for three years running. This year, the deficit was nearly 1 million ounces.
But it gets worse. If current trends persist, above-ground stocks of platinum will shrink to just over 2 million ounces in total. That's only enough to cover three months of global platinum demand.
So a supply crunch in platinum isn't just on the way – it's ongoing. At the same time, Asian investors are flooding into the commodity as a hot new asset class...
Platinum is still lagging gold. But its cheap valuation flies in the face of reality. That won't last much longer... There's simply too much pressure on platinum to join its brother's bull run.
In other words, it's a great moment to go long on the other white metal...
If you're looking for an easy way to play the approaching platinum boom, the abrdn Physical Platinum Shares Fund (PPLT) is a great way to do it. This fund holds physical platinum bars in a trust. So shareholders get pure exposure to platinum without the fuss of owning it physically.
For many years, platinum has lagged while gold surged ahead. But that losing streak can't last much longer. Buy platinum today, before the price squeeze starts in earnest.
Good investing,
Sean Michael Cummings
Further Reading
Platinum was once considered the most prized precious metal. But to start the year, it was trading at its largest discount to gold ever. This rare setup has led to big reversals in the past. And when momentum flips, platinum has a history of outperforming gold by more than 10-fold... Learn more here.
During turbulent times in the market, adapting is the key to success. And while stocks struggled to start the year, a few key assets have quietly moved higher. In moments like this, the right mix of investments can be an investor's best competitive edge... Read more here.
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