Tags: Gold | rises | above | platinum

Gold Prices Rise Above Platinum as Investors Seek Safety

By    |   Tuesday, 07 Feb 2012 07:33 AM

Platinum prices historically stand above those of fellow precious metal gold, because it’s more expensive to extract the former than the latter. But the normal price relationship has reversed since September, The Wall Street Journal reports.

Gold traded at $1,721 an ounce, while platinum traded at $1,622 at mid-afternoon Eastern Time Monday.

The price discrepancy may bode ill for other financial markets. That’s because gold is traditionally a safe haven investment in times of economic turmoil, while rising platinum generally signals strong industrial growth.

About 47 percent of the world's platinum supplies are used in catalytic converters, a cylinder that scrubs out pollutants from car exhaust. So its price is a proxy for industrial growth.

Concern that Europe’s debt crisis will curb world economic growth has put the kibosh on platinum.

"There was this incredible [economic] uncertainty," Roy Friedman of precious metals dealer Dillon Gage Metals, tells The Journal.

"Platinum all of a sudden found itself with no good reason for new investors to come into the market."

Some investors think gold will rise further above platinum. "It [the price gap] is a fear gauge," David Jollie, a precious-metals analyst with Mitsui Precious Metals, tells The Journal.

And some investors are bullish on commodities across the board.

Money managers increased their combined net-long position across 18 U.S. futures and options by 11 percent in the week ended Jan. 31 to a 12-week high, according to Commodity Futures Trading Commission data, Bloomberg reports.


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