1 December 2020: The recent increase in the platinum price has heightened debate about the treatment and role of physical investment demand in market balances and price discovery: WPIC includes net physical investment as a component of platinum demand, and consequently also as a source of supply in the case of net disinvestment. Excluding investment from demand to create an ‘industrial’ balance, can dissuade investors and harm sentiment, as price strength appears contrary to the ‘surplus’ suggested. This approach, paradoxically, warns that supply from investment is a material risk to a fall in short-term prices. In the past 40 years, there have been only 2 years where net physical disinvestment has occurred. ETF investment holdings, since first launched in 2007, have seen positive uptake in 11 of 14 years. Palladium ETF liquidation is frequently argued to support the claimed platinum price risk, however palladium disinvestment occurred after the price had doubled and continued as the price subsequently doubled again. Until the platinum price doubles at least, or rises well above the gold and palladium prices, this risk looks minimal.
Platinum Perspectives
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