All That Glitters Isn't Gold

Platinum's Fundamentals Are Driving It Higher

Automotive demand for platinum increased 12% in 2022, largely because of a 28% increase in the manufacture of hybrid vehicles. Global automotive demand is expected to increase by another 10% by the end of the year. Other industrial demands are expected to rise 12%, much from LCDs, the glass industry, chemicals, petroleum and electronics.

Although platinum has been a fairly flat market over the past two to three years, a recent World Platinum Investment Council Report says the balance of supply and demand is turning in platinum’s favor in 2023. “After two years of significant surpluses, the platinum market is forecast to move to a material deficit in 2023,” the report said.

The market will move from a 776,000ounce surplus in 2022 to a 556,000ounce deficit in 2023, a swing of over 1.3 million ounces in a narrowly traded metals market.

PLATINUM BAR & COIN DEMAND EXPECTED TO DOUBLE

The biggest demand growth is forecast for investments. Platinum bar and coin demand are forecast to double to 450,000 ounces this year, although platinum Exchange Traded Fund (ETF) outflows may cut into that rise. There should also be a huge demand for platinum jewelry in China, which will now be wide open for pent-up consumer demand this year and next. Jewelry demand is expected to rise 15% in China. Smaller growth rates are expected in Japan and India.

Platinum closed 2021 at $968, and it closed 2022 at $1,031; so it managed a 6.5% gain despite a strong U.S. dollar for most of the year. Platinum was rescued when the dollar started to fall in the fourth quarter of 2022.