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The majority (about 80 percent) of platinum is mined in only one country, South Africa. For those who are not aware, there is a chaotic situation in South Africa right now which is only continuing to get worse, and some believe that South Africa may soon become a failed state.
Commodities expert Rick Rule has been consistently saying for years that any chaos in South Africa would quickly lead to soaring platinum prices. Here is a recent interview where he says it:
"The demand-side for the platinum-group elements is very much intact. The supply side is what's curious. Most of the PGEs in the world come from three countries. South Africa--not the model of stability. Zimbabwe--almost not a country. And Russia--which of the three is a paragon of stability. But if you were to experience social and political disruption in any of those markets, you would see markedly tightened PGE supplies, and I would argue higher prices.
If you shut down production in any of the markets I described--I expect you'd see a price-explosion. I'm not saying that South Africa, Russia, or Zimbabwe is going to blow up. I'm just saying that the production of this element is constrained to countries that are---well, let's just say it isn't Western Australia."
On another occasion, Rule wrote: "The utility of platinum is so extraordinary. The amount of platinum that it takes to deliver the air quality that we enjoy today relative to the cost of the vehicle that that platinum enables the sale of is incredible. At today’s platinum prices, it takes about a $100 or $125 worth of platinum in catalytic converter to sell a $40,000 car. Were the price of platinum to double, it wouldn’t impact the price of the vehicle whatsoever."
In the Asian countries, like Japan and Korea, platinum is also considered a precious metal rather than an industrial one. It was briefly used as money in Russia in the 1820s and 30s. Investment demand for physical platinum, however, matches just one-tenth the value of silver investing each year, and less than 1% of investors' demand to buy gold. This implies that monetary supply is extremely scarce.
There is also a massive platinum short position on the COMEX, even bigger than the one on gold. What happens if we get a default, like what happened to palladium a few years ago?