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Platinum Holdings Expand to Record on Mine Disruptions

Investors have accumulated record holdings of platinum assets as they seek to protect their wealth against the threat of inflation with a metal that also benefits from supply disruptions in South Africa, the largest producer.

Holdings in exchange-traded products, or ETPs, expanded 1.1 percent to 46.748 metric tons, surpassing the previous peak of 46.316 tons on Sept. 7, 2011, according to data tracked by Bloomberg. The hoard has risen 17 percent this year, beating the 6.8 percent gain in gold holdings, which stand at a record.

Platinum prices rallied to highest level since February this month as miners staged a six-week stoppage at Lonmin Plc’s (LON) Marikana mine, which accounts for about 10 percent of global output, and the U.S. central bank announced a third round of quantitative easing. The workers at Marikana yesterday agreed to accept a pay rise and return to work on Sept. 20.

“What’s happened in South Africa has been the prime driver, but there would have been a rub off from what happened in terms of quantitative easing,” said David Lennox, a resource analyst at Fat Prophets. “People have also taken the opportunity to run into platinum on the back of the discount to gold.”

Immediate-delivery platinum has advanced 17 percent this year, outperforming rallies in gold and palladium, while lagging behind silver’s 25 percent climb. It traded at $1,635.75 an ounce at 3:30 p.m. in Singapore compared with spot gold at $1,777.40. Platinum, used to make catalytic converters and jewelry, was last more expensive than gold in March.

Shot by Police

Platinum holdings in ETPs rose 6.6 percent in August, the biggest gain in 20 months. The dispute at Marikana left at least 45 people dead, including 34 protesters shot by police on Aug. 16. ETPs trade like shares and enable investors to bet on price changes without having to take physical delivery of commodities.

The amount of platinum now held in ETPs is equivalent to about 23 percent of global mined supply last year, according to Bloomberg calculations based on Johnson Matthey Plc (JMAT) data. Global mined production is expected to be 6.04 million ounces (171 tons) this year, Barclays Plc estimated last month, with South African output forecast at 4.38 million ounces.

The U.S. Federal Reserve on Sept. 13 announced a third round of quantitative easing to boost growth, saying it would buy $40 billion of mortgage debt a month and probably hold the federal funds rate near zero at least through mid-2015. The European Central Bank last week gave details of a plan announced in August to buy the debt of member states. The Bank of Japan (8301) said today that it would increase an asset-purchase fund, expanding its easing program in the third-largest economy.

‘Printing More Money’

“With the perception that central banks are printing more money, people are going to go into those assets that are more scarce,” said Michael Gayed, chief investment strategist at New York-based Pension Partners LLC, which advises on more than $150 million in assets. “The idea is that hard assets can keep up with any inflation.”

Gold holdings in ETPs climbed 0.4 percent to an all-time high of 2,517.15 tons, data tracked by Bloomberg showed yesterday. That’s the third-largest stockpile when compared with national reserves, lagging behind the metal held by the U.S. and Germany, according to data compiled by Bloomberg and the International Monetary Fund.

The increase to record ETP holdings of platinum was predicted by Dominic Schnider, global head of non-traditional assets at UBS AG’s wealth-management unit. Gold’s characteristics as a store of value are also found in platinum, Schnider said on Sept. 12.

To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editors responsible for this story: Steve Stroth at sstroth@bloomberg.net; James Poole at jpoole4@bloomberg.net

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