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Platinum's Ascending Demand and Depleting Reserves: A Golden Opportunity for Traders


29 September 2023 Written by Feng Zhou  Senior Market Analyst Feng Zhou

When delving into the realm of commodities, the inherent dynamics of supply and demand remain pivotal in dictating price trajectories. An overflow in supply usually corresponds to a decline in prices, while scarce availability can trigger a substantial appreciation in value. Platinum, a metal inherently crowned as precious, is on the verge of becoming an even more coveted commodity, potentially painting a lucrative canvas for traders around the globe.

Timing plays a crucial role in commodity trading. Traders often find themselves in a perpetual wait, anticipating that opportune moment when supplies are waning, and prices are yet to reflect the scarcity.

The increasingly rare nature of Platinum is becoming a burgeoning reality, rendering it a valuable asset in the trading world.

Platinum: An Embodiment of Rarity and Value

Currently, Platinum is witnessing a transformation, emerging not only as a precious entity but as a rare commodity, with its value expected to soar in the upcoming days. The realization of its escalating rarity is dawning upon the market, promising lucrative rewards for traders who have incorporated platinum into their portfolios at prevailing lower prices. Meanwhile, those refraining from metal investments might find themselves ensnared in a web of missed opportunities.

For individuals unacquainted with precious metal trading, platinum emerges as an appealing gateway into this lucrative sector, allowing them to explore and understand the nuances of trading precious metals.

Current Market Dynamics: A Favorable Terrain for Buyers?

At this juncture, platinum (XPT) lingers at a year-on-year low price of $889 (USD) per ounce, aligning with the average price spectrum witnessed over the past five years, albeit on the lower end. The outbreak of COVID-19 precipitated a plummet in XPT prices, reaching a low of $592 in March 2020. However, a swift and robust correction ensued, catapulting prices to $1302 in a span of less than a year. Subsequent trends have witnessed a depreciation in value, echoing the adage of purchasing low and selling high. If predictions rooted in scarcity modeling hold any veracity, the market might never encounter such low prices again.

Diminishing Supplies Amidst Ascending Demand

Platinum’s versatility finds applications across diverse sectors, ranging from jewelry to electronics. The burgeoning transition to electric vehicles globally has accentuated its demand in the automotive sector. Post the semiconductor crisis, the automotive sector has witnessed a 13% surge in demand year-on-year, a trend that shows no signs of abating.

Manufacturers are currently drawing from above-ground reserves, a temporary solution with depleting sustainability.

Recent insights from the World Platinum Investment Council (WPIC) project a deficit exceeding a million ounces in 2023, marking a historical scarcity. This emerging deficit, coupled with sustained demand from both industrial sectors and the jewelry market, is amplifying the scarcity, underscoring the imbalance between consumption and production.

Evolving Landscape and Potential Price Catalysts

The accelerating adoption of electric vehicles (EVs) globally is magnifying the current deficit, and with production failing to meet contemporary needs, the scarcity is poised to intensify. Such scenarios typically pave the way for price elevations. Like its counterpart gold, platinum is revered as a strategic hedge against inflation, with its value often escalating in tandem with rising living costs. This intrinsic characteristic renders it a viable investment avenue for those seeking wealth preservation amidst inflationary pressures. Its pricing patterns often mirror those of gold, a renowned refuge against economic uncertainties and recessionary climates.

In instances of economic downturns or recessions, a migration of wealth towards precious metals is a common phenomenon, with many opting for such commodities as secure havens.

Conclusion: An Unmissable Investment Prospect?

The ongoing dip in platinum prices, reflecting a 32% depreciation since the inception of this year, combined with a projected production shortage of over a million ounces for 2023, outlines a compelling narrative for investors. The escalating demand for platinum juxtaposed with its depleting reserves paints a fertile ground for substantial investments.

Although apprehensions related to recessions seem to be relegated to the background currently, the prevailing price structures are beckoning substantial investments, with no foundational elements indicative of a potential crash in platinum prices.

Whether you are a veteran in the trading arena or a novice exploring online trading avenues, platinum seems to be a quintessential addition to your investment repertoire, potentially promising lucrative returns in the face of depleting supplies and surging demands.

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