Is platinum the new gold? – ABN AMRO
|Georgette Boele, Precious Metals Strategist at ABN AMRO, suggests that they are of the opinion that platinum is not the new gold as Platinum lacks the liquidity that gold has, it is not held by central banks in their official reserves, and it has fewer “currency” drivers (less sensitive on the US dollar and on rate developments).
Key Quotes
“We have already challenged the general adopted view that gold is a safe haven as it will probably in future behave more like a risky asset because of negative rates elsewhere (gold doesn’t have negative rates). If we seriously question that gold is a safe haven, platinum is certainly not one.”
“For an asset to be a safe haven, its market needs to be extremely liquid and platinum is relatively illiquid. This does not mean that platinum from time to time behaves like a “safe-haven,” but this in our view reflects the following factors.”
“First, platinum is the only cheap alternative in precious metals. Palladium has been expensive for quite some time, notwithstanding the expected supply shortage. Gold has risen significantly this year, and considering investor positioning, the rally has gone too far.”
“We think investors have realised that the risk of a correction in gold prices is increasing, and therefore they have opted for the relatively cheap alternative: silver. Since silver has already caught up, platinum was the only cheap alternative left in precious metals that would probably profit if gold prices continue to rally, but at the same time with limited downside given prices were (and still are) at relatively low levels. In short, platinum is not the new safe haven, but investors feel it is a cheap alternative to gold with probably less downside risks.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.