SUBSCRIBEHigh Mining Costs, Supply Concerns to Boost Platinum Prices in 2012
February 22, 2012Despite the sharp rise in gold prices in recent years, platinum continues to slump. Consecutive years of global supply surpluses knocked down platinum prices from an all-time high of $2,276 to irrationally low levels.
For roughly five months now, platinum has been cheaper than gold. While this is by no means unprecedented, it is certainly far from normal. Gold hasn't been worth more than platinum since December 2008 (prior to that, not since December 1996)--and for good reason. 80% of all the world's platinum comes from just one country-- South Africa--and it's more costly and difficult to mine there than perhaps anywhere else.
South Africa's 6% inflation and rising wages increased platinum miners' average cash costs to over $900/oz. last year, compared to $700/oz. on average for global gold producers. That means gold presently sells for almost 2.5 times its average cash costs, while platinum is worth just 1.85 times its mining cost, suggesting platinum is undervalued relative to gold.
Gold:Silver Ratio Changes Course on Rising Physical Silver Demand
January 10, 2012 |
Although the World Gold Council thinks global gold investment demand in 2011 rose 33% yr/yr, the Silver Institute says investment demand for silver probably increased 66%. Those projections are further backed by evidence of increasing physical demand, which pushed silver coin sales across the world to record levels. The U.S. Mint, for instance, sold 15% more American Eagle silver bullion coins in 2011. That may not seem like much, but 2010 was also a record year for silver coin sales. By comparison, gold American Eagle coin sales were actually down about 18% in 2011 (in terms of total ounces, not number of coins). As we reported back in July, Australia's Perth Mint's silver coin sales from January to June alone were 66% higher than all of 2010, and in September, the Mint said sales were still at "unprecedented levels." Australian gold coin sales, however, were not nearly as high.
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