Invest in Platinum: 2009?

January 3, 2009 | By | Reply More

platinum-eagle-coin At face value, it seems that now is the right time to invest in platinum when you consider the highs and lows of the past 52 weeks. Platinum reached an all-time high of just over $2,300 per ounce in March of 2008 and today tries to hold firm around $940 an ounce–a 60% drop from its primordial heights of 1st quarter 2008.

But a New Year is upon us and things are already beginning to change. With the news of the bloody conflict in the Gaza strip, precious metals prices got a jump-start during the last few days of 2008. Platinum was actually struggling in the mid-800s before the news of increased instability and the breach of the cease-fire in the Middle East.

Still, even in the mid $900s, platinum is at an all time low. It’s hard to imagine such a historically expensive metal going much lower. But is it a good time to buy?

That depends on your time horizon and a very unexpected twist in the precious metals sector: ties to the U.S. automaking industry. In years past, automakers consumed approx. 900,000 ounces of platinum in a single year–for use in their automobile’s catalytic converters. This accounted for about half of all platinum demand worldwide, according to London-based precious metals refiner, John Mattey, Plc.  With the spotlight heavily on the ailing “Big 3″ and the declining automobile industry, platinum took a serious hit in 2008.

2009-chevy-camaro

Surprise, surprise–what to watch when considering an investment in platinum? Chevy, Ford, & Chrysler–”The Big 3″.

Our recommendation is to hold platinum for those few of you who actually own platinum coins or hold investments–now is certainly not the time to sell, with platinum prices at an all-time low.

Consider buying when you see the first signs of recovery in the auto-industry. The vast and great challenge of platinum investing: with platinum historically and unbearably volatile, timing the market in such a commodity can prove challenging–more so than gold and more familiar precious metals. By the time a recovery is underway, the rug may have already been pulled from under your feet, and platinum may have already shot up 20-30%. It is too late to invest.

Our recommendation: Hold or Buy for Long-term investment (but be prepared to wait!)

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