Gold getting out of reach; Buy platinum

In an unusual development – perhaps a reflection of the world we live in – gold prices have remained well above that of platinum, which is much rarer than the yellow metal, for four days now, with no signs of even a parity being achieved in the very near future.

As of 12 noon UAE time, gold prices are hovering at $1,790 per ounce, while platinum is trading at about a $10 discount to gold. This is unusual because, according to experts, platinum is 15 times rarer in the earth’s crust than gold, and its price has historically reflected that rarity.

In November, 2005, for instance, platinum prices averaged $934.8 per ounce while gold was going for $457.9 per ounce – or less than half of platinum prices. However, the past decade has seen gold prices advance by an average of 20.4 per cent per year, while platinum prices have increased at a much lower clip.

Moreover, the economic slowdown and recent economic events of global consequence have intensified gold’s allure as a safe haven, resulting in acceleration in its price. On the other hand, platinum has remained a sideline play, resulting in the rarer metal losing out in the price race with its much more abundant cousin.

However, experts maintain that even though platinum price can fall below that of gold – as evidenced by current prices as well as for a brief period in 2008 – that situation will not sustain itself for long periods of time owing to its inelastic supply and the fact that demand for platinum increases during gold price surges.

In fact, many experts are saying that the current gold prices are unsustainable and the party will end soon – in that case, it may be wise to sell your current gold and buy platinum instead.

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