Will Platinum Prices Go Up Next Year? 5 Factors Explained
The price of a troy ounce of platinum on the New York Mercantile Exchange (NYMEX) had been as high as $1064.30. Many precious metals exchange companies fear that the prices will reach new heights in the near future.
Will Platinum Prices Go Up Next Year?
Future contracts whose value is tied to the price of platinum are known as platinum futures. The Japan Exchange Group (JPX) and The New York Mercantile Exchange (NYMEX) are the two exchanges where platinum prices are traded.
Platinum futures are quoted in US dollars and cents per troy ounce. Most companies with gold and silver ira IRA accounts follow the NYMEX platinum contract that mandates a minimum tick price of $5 and a contract size of 50 troy ounces, with 99.95% purity as the minimum grade of platinum. The contract is traded electronically for six days a week, and the deal is settled upon delivery of the goods.
Factors Affecting Platinum Prices
The following are the factors affecting platinum prices:
1. Supply
South Africa currently mines about 70% of the world’s freshly discovered platinum but has mined up to 75% in the past. Consequently, the availability of platinum is highly dependent on conditions in South Africa.
Considering the recent rise in political instability in South Africa and other developing countries, the political risk associated with platinum supply is rather high. Troubles with the availability of power and water, and fluctuations in the value of the South African rand, have impacted the country’s platinum output.
2. Automobile Manufacturing
Platinum catalysts play a significant role in the production of automobiles. Because of its low reactivity, platinum is used extensively in catalytic converters, which have been employed in automobiles with internal combustion engines since the 1970s to drastically cut emissions. Platinum consumption has skyrocketed since the catalytic converter has become standard equipment on practically every vehicle in the previous quarter century.
3. Gem and Jewelry Trade
Two decades ago, there was hardly any interest in platinum jewelry. However, the popularity of platinum jewelry has skyrocketed in recent years. Once again, China is a big factor in this since the demand for platinum jewelry in China has exploded over the past decade.
4. Use in the Industrial Sector
Platinum’s widespread industrial use is on the rise, with even some of its more conventional applications benefiting from technological advancements. It is used to reduce nitrogen oxide emissions from diesel vehicles as a result of advancements in automotive catalyst technology and tightening emission limits under the Euro 6 rules. Fuel cell electric vehicles are a promising technological development; however, they use twice as much platinum as conventional internal combustion engines.
5. Capitalization
The usage of platinum in currency and as an investment is a recent development. Not until the 1970s did mass production of bullion and coins begin. Approximately 11% of 2016’s overall demand for platinum comes from investors.
The Future of Platinum Prices
The question now is whether or not platinum prices will climb as a result of all the forces that are increasing demand for the metal. It’s more art than science to predict platinum prices. The market should anticipate an increase in the platinum price per ounce since demand is expected to greatly surpass supply.
Final Word
To learn more about investing in platinum, whether platinum bullion, platinum coins, or adding platinum to an IRA, get in touch with Orion Metal Exchange. As one of the best precious metals IRA companies, we offer an elite group of advisors in the field of precious metals.
