[heading]Buy Platinum With Bitcoin:From 177,777 Bitcoins Per Platinum Ounce To 6 In T- 4 Years[/heading]
If Homer Simpson were a platinum buyer and not a fat middle class American, AND if Homer knew about Bitcoin, this trade would be a definite: “Doh!” Wherefore?
Because in 2010 one ounce of platinum cost 177,777 bitcoins. Today that number has significantly declined as one needs only approximately 15 bitcoins to buy 1 ounce of Platinum. However, not many months ago, at the end of April, 6 around bitcoins would get you one ounce of platinum.
Platinum has had a very interesting go at it during the existence of Bitcoin. It, in fact, collapsed all the way down from $2,200 in 2008 as a result of the banking collapse. It took the biggest hit of any precious metal at that time. Whereas in 2008 the platinum price was double the gold price, by 2012 the platinum price was cheaper than the gold price.
For those who think that now must be a terrible time to buy platinum for Bitcoin, a closer look into the markets actually tell a different story. The story is one of a virtual, decentralized currency that has caught on and shown a price correction north reflected in increased awareness and demand. The platinum price story shows one of tumult and increased demand. Let’s start with the good news first.
Gross demand for platinum from the global jewelry industry is on target grew in 2012 by 10% to 2.73 million ounces, the highest since 2009, according to Johnson Mathey’s “Platinum 2012 Interim Review.”
With precious metals prices rising, jewelry manufacturing in China has expanded to become the biggest market for such platinum product. Demand for platinum jewelry is anticipated to rise by 25% to 100,000 oz. China is expected to grow 14% to 1.92 million ounces in 2012.
The heightened demand for platinum jewelry also comes at a time of great stress on the mining sector, due to poor treatment of workers and the stubbornness of the mining corporations to acknowledge their true, fair profit margin.
Considering recycling of old retailer stock and consumer pieces, net platinum jewelry demand in China is expected to grow by 16% to 1.42 million ounces. Platinum purchases by the Chinese jewelry industry through the Shanghai Gold Exchange and Hong Kong traders ran at a three-year high in the first eight months of the year due to low prices.
Driving the demand in part, new Hong Kong jewelry brands have increased the need for manufacture stocks of platinum jewelry. Demand is stalwart throughout mainland China.
Alongside this increased demand, comes some hardship out of South Africa, where 75% of platinum is produced.
Founded in 1917 by JP Morgan, the world’s largest platinum producer AngloAmerican finalized in January 2013 that it will cease production at several mines in South Africa while it seeks to return to the black as costs rise in the production of platinum. Majority-owned by UK-listed miner Anglo American PLC, Anglo American Platinum produces 40% of the world’s mined platinum, saying that the changes to its business will result in 14,000 job losses and a drop in annual production of 400,000 troy ounces. Platinum is the rarest precious metal.
“Anglo American Platinum has previously stated that a number of its mines have been under considerable economic pressure for some time. The continued operation of unprofitable shafts within the current configuration, and in light of the Company’s revised demand and cost expectations, is not sustainable,” according to the company.
Most job losses will be, of course, in the strike-ravaged Rusenburg, where the company will reserve the resources of four shafts. Unrest in this area led to multiple strike-related deaths in 2012. The company stated it will, furthermore, divest its Union mines “at the right time.” According to the company, the changes will save 390 million rand ($44.9 million) a year and deliver ZAR 3.8 billion of annual benefits by 2015. The company will now target 2.1 million to 2.3 million ounces of platinum production a year.
Similar to many mining companies in South Africa, Anglo American Platinum is responding to strikes that struck South Africa in the second half of 2012, ceasing production as some of the country’s largest gold, platinum and iron-ore mines. The strikes spread once police began murdering protesters at platinum producer Lonmin PLC, leaving approximately 50 people dead across the industry and causing the loss of 200,000-400,000 ounces of platinum. Anglo American Platinum will file a loss for 2012 after a strike at the end of 2012 resulted in a production loss of 306,000 troy ounces of refined platinum at its own operations and joint ventures.
So, although platinum has become unfathomably more expensive in BTC terms, the context is schewed. Bitcoin is really too new to know whether or not it is now a good time “buy platinum for Bitcoin,” but time will tell. And, what is likely, is they will both serve as part of the great portfolio, due to platinum’s many industrial uses.