Platinum group metals’ investment potential may exceed gold’s and could be underestimated by investors, said OAO GMK Norilsk Nickel, the world’s biggest palladium producer.
“PGMs have investment potential comparable or even greater than gold,” Roman Panov, Norilsk’s international assets director, said in a speech at the Investing in African Mining Indaba in Cape Town today.
About 35 percent of global annual gold output is accumulated as investment compared with only 8 percent for platinum and 14 percent for palladium. Exchange-traded funds for PGMs, which started in 2007, “have become the dominating investment vehicle for physical PGM,” he said. Platinum, palladium and rhodium are PGMs.
Palladium has rallied 24 percent from a one-year low in October while platinum has increased 16 percent this year. The metals are used in devices that capture noxious gases in vehicles and to make jewelry.
On-ground stocks of PGMs are much lower than those for gold, Panov said. If the production is halted, existing platinum stockpiles could last seven months and palladium 16 months, while there’s enough gold to meet demand for 22 years, Panov said.
Platinum demand will rebound strongly in 2013, “matched to a lesser extent by an increase in supply,” Panov said. The advance in demand should push the platinum market back into a deficit, driving prices higher, he said.
Palladium may have a deficit of about 355,000 ounces in 2012 and 517,000 ounces in 2013, he said.
Palladium will probably climb to $2,100 per ounce by 2017 “while upside for platinum price is 50 percent,” he said.
Platinum retreated 0.3 percent to $1,621.25 an ounce by 2:53 p.m. in London while palladium for March delivery lost 1.1 percent to $698.25 an ounce. Gold rose for the first time in three days, adding 0.5 percent to $1,728.98 an ounce.
Norilsk, which is also the largest nickel producer, is considering buying platinum assets in South Africa to increase production of PGMs during the next decade, Reuters reported, citing Panov.