Why continue to buy platinum coins

As many of us know, both platinum and palladium are both used extensively in the automotive industry in the manufacturing process of catalytic converters. With the recent talk of the automotive industry to be included in the 700B financial bailout by the government, the prices for both platinum and palladium are dropping fast. If we see the big 3 car manufacturers go out of business (which I personally believe will not happen), we could really see the bottom drop out from these metals. At the close of todays markets, there was nearly a $80 difference between an ounce of gold and an ounce of platinum. Platinum is down well near 60% for the year and palladium nearly the same. With the demand of both platinum and palladium dwindling, so will the value do the same. Why would anyone continue to buy a coin that is made from a precious metal that continues to drop in value. I don't think the mint will stop making platinum coins, but I also believe that the prices we pay today (even at the mints newly adjusted prices) will not be close to what the value of the metal is tomorrow. Just sitting here pondering the market and mostly just typing out loud! Comments welcome.

 

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The reason to buy Platnium is because Plutonium is not available, too expensive, dangerous to your health and likely a national security risk. However, Osmium might be a better choice but is far too expensive by the gram, and you would have to make a very small coin. It is possible to make a Osmium, Silver Alloy. That might be very exciting.

 

I like palladium. to much of a premium over spot though for me to afford a palladium maple leaf.

 

If platinum and palladium get to high in cost, silver works as a replacement. They should make coins out of lithium.LOL Electric cars will probably have alot of it and cost will rise.

 

Thats the advantage. It would be harder to steal but you'd have to ship it from the Mint through Fedex because I doubt the USPS will ship either Osmium or Plutonium....

Ruben

 

Platinum and palladium are used in catalytic converters and the Big 3 US auto makers are major purchasers of catalytic converters to be used in the vehicles they make. However, even if the Big 3 shut down operations tomorrow and never made another vehicle the demand for catalytic converters (and the precious metals used in them) would remain (although probably with a momentary blip). Drivers will continue to need new vehicles whether the Big 3 auto makers are still around or not. If the Big 3 close operations other auto makers will step up and fill the void - and buy catalytic converters for those additional vehicles they will make.

 

In of itself it isn't toxic but when in the air it turns into a peroxide which is one of the most powerful oxidizing agents known to man and has a marvelous affect on human lung tissue and the mucosa of the eyes. This shouldn't worry the mint workers that much. Its a recession and they should be glad to have jobs. And yes, it is very expensive which is why I remembered it so fondly!

It has a wonderful bluish luster. They can use the old Morgan design in a coin about a 3rd the size of a dime and package it in special collector sets with glass double reflex magnifying glasses in a slab. The special new O mint mark will be for the new New Orleans mint created by GM to produce this new coin.

Ruben

 

Can anyone post a picture of a platinum eagle. The mint picture/s aren't very good to say the least. I want to see the color difference between the platinum and the silver eagles. Have never seen one before. THANKS. ZG

 

Platinum is a much more scarce metal from what I have read, compared to gold. It's not found at nearly as many places on Earth as gold is.

Platinum is an excellent metal for jewelery because of it's hardness and strength. It takes a much higher temperature to melt platinum than it does gold. Like almost another 1000 degrees. The melting point is around 3200 degrees. And it is hypo-allergenic, so no adverse health affects. My wife's engagement ring and wedding band are both platinum.

A six inch cube of platinum would weigh 158 lbs. It's a very strong dense, and rare metal. Very hard to bend or scratch.

It's very surprising that it would be close to gold in value right now. All I can guess is that it's not used in nearly as many applications as gold, but I really don't know. I think we have some bad deflation going on which could also be causing the prices. I mean, gas just hit $1.99 in town today. I felt like I went back in time. There's more of everything (products) available right now, including PM's in comparison with what people are spending or willing to spend. As a result, prices are dropping like a rock, giving us deflation. Which could be the reason why PMs are so cheap right now. I have to admit, I would have never predicted something like this situation happening right now. If anything we should have severe inflation happening.

The PMs will come back. I'd say it's a buyers market right now if you've got the cash. Don't get discouraged.

 

This thinking is exactly what drives deflation. It doesn't just work for platinum. It goes for all manufactured products as well. If people think prices need to come down or they expect that prices will be going down, the majority stops buying things and eventually it will happen.
Theoretically, there's more product available than money to buy the product, so prices have to come down. Just like GM can want 40k for a lot full of new Suburbans but if nobody has that kind of money and people can't get loans for them, the price has to go down and down, until the point is reached at which people can afford them. Of course, at the expense of the company. The theory applies to everything. It must be working with gas as well. The market could not sustain $4.00 a gallon long term. I wouldn't have believed it at the time, but it came true. What's funny is, there isnt even a mention of it on the news. Because it's good news I guess.

 

Check out these graphs (from Kitco) of the price of platinum (16-year graph and 5-year graph). Notice how the recent fall in price is just about as steep as its rise earlier this year.





This is not the first time the price of platinum (or other precious metals) has dropped sharply. Let's take a look at the historical price of platinum.

I graphed out the price of platinum over the years. (I had to place the graphs in a Word document to upload them to this site.)

I found the data for the first chart in a 1936 Time magazine article here. They only give the price of platinum at a few points in time (so the graph has only a few data points) and I had to assume the actual year in some instances.

I found the data for the second graph here. This data is much more complete. I decided to use the yearly average price for each year rather than the monthly price (because it was easier than plotting the price for each month).

Notice the steep declines in the price of platinum after WWI and 1980.

 

When gold and platinum sell for approximately the same price, I would think platinum is the one to buy. I've never owned a platinum coin, but that might change if the price keeps dropping. Someday, platinum coins will probably again sell at a substantial premium to gold.

 

If they were to shut down, it would be like 1942-1946 all over again. Ingenuity would take over, and believe it, people would start driving cars that they wouldn't have thought of driving before. WWII shut down all production of automobiles, only some trucks for agricultural use were produced. During the war, and even afterwards for awhile, it was difficult to even find a used car. It was even more difficult to find parts, tires etc. for your car.

But people didn't drive unless they absolutely had to, remember, gas rationing was pretty severe.

 

Right now gold is the solitary metal holding value, the rest, silver, platinum, palladium and all the non-precious metals have declined dramatically in value. Now copper is at about $1.54 and the old pre-1982 cents are just about at par value wise again. The nickel that was worth nearly 10¢ melt is now worth something like 3.2¢.

 

its denisty at room tempurature is measured to be about 22.59 g/cm3 for osmium which is less than an ounce per ML of solid metal. I don't know the volume of a dime, but it might be about a cubic centimeter, just guessing.

 

To say we live in interesting times would be an understatement.

Platinum is also used to create hydrogen, as in hydrogen fuel, if I'm not mistaken. So if the hydrogen fuel cell becomes the alternative energy in the cars of tomorrow, I can see platinum recovering it's past highs.

 

actaully - I take it back a Quarter is a shade less than a cubic centimeter
(2.426/2)^2 * 3.14 * .195 =~ 0.9 CC

so a quarter that weighs ~ 20 grams is about correct where an ASE weights in at 31.1 grams?

Ruben

 

Spot price of Gold today = $744.60

Spot price of Platinum today = $774.00