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.”