The investment case for platinum has become more compelling as 2020 has progressed, supporting strong gains in platinum investment, in particular growth in ETF holdings of over 600 koz since platinum’s March and April price lows and bar and coin demand of 523 koz in the first three quarters, says the World Platinum Investment Council I n its latest quarterly report.
Investor interest and positioning increased further based on the positive developments in 2020. These included the stronger than expected V-shaped recoveries in automotive markets, sustained pandemic-related risk driving precious metal investment demand and severely reduced supply, that all contributed to the record -1,202 koz deficit forecast for 2020.
Platinum’s sustained discount to gold and the increased relevance of hard assets has seen more gold investors considering and owning platinum, many for the first time. The wider awareness of platinum’s key strategic role in the growth of the hydrogen economy, has also driven more investors to consider platinum investment.
When these investors take a closer look at platinum, they see that platinum’s constrained supply and strong demand growth potential are more compelling than expected and in turn greatly enhance the likelihood of sustained investment demand growth.
Heightened economic risk of lockdowns to combat a second wave of COVID-19 infections, albeit somewhat reduced by vaccination developments, and the associated impact on government debt levels appear likely to maintain interest in precious metals, including platinum, as an attractive alternative investment.
This, combined with platinum’s heightened demand growth potential and the -224 koz deficit forecast in 2021, suggests upside risk to current investment demand forecasts.