Precious Metal Investing

How Green Energy Initiatives will Influence the Price of Platinum

Many in precious metal investing have been horrified to see their platinum coin and bullion perform very poorly during the last months of 2008. The spot price of platinum fell from an all-time high of nearly $2,200 per once to little more than $800 per ounce in the span of less than a month.

Since platinum has never been used as a currency, it is highly linked to its physical uses. One of the largest of those uses is as the active catalyst in the reaction of a catalytic converter. Many industrialized nations require some sort of emissions control device on automobiles, with most of these devices using platinum. When the automotive market took a very steep decline in late 2008, the price of platinum fell along with it.

However, there is some hope on the horizon for beleaguered platinum investors who are still interested in recouping losses from an early- to mid-2008 purchase. Precious metals investing, as a whole, have performed well as a safe investment since the international financial crisis began, hedging against losses in just about every other financial vehicle.

Moreover, the outlook for some technologies that are likely to be heavily funded by governmental stimulus money. Billions of dollars have been made available by several countries that passed emergency economic stimulus programs in early 2009, such as the American Recovery and Reinvestment Act (ARRA) signed into law by President Obama. The ARRA, for instance, mandates spending for carbon-neutral energy investment. This will be spent on solar panels and wind turbines as well as the transport and storage systems that will support those technologies as part of the new, “smart” electric grid that is proposed.

Fuel cells are one important type of that technology to be used with hydrogen storage and delivery systems, and platinum is a major component in current fuel cell designs. That makes precious metal investing in platinum a potentially vast growth market, now that prices are near historic lows. A typical fuel cell of the current design use about 100g of platinum per fuel cell when used with vehicles.

Platinum, unlike the precious metals gold and silver, is also subject to be replaced by new technologies just as it benefits from them. The platinum fuel cell, for one, has been a target to eliminate by researchers for many years. Its inclusion adds considerably to the price of current fuel cell technology, putting it out of reach for the average consumer.

Precious metal investing has been impacted by many competing forces in the post-economic crisis economy. With the platinum spot price being pulled down by declines in older technologies, inventors are finding new uses for it all the time, many of which are in growth industries like green energy. Precious metal investing in more traditional gold and silver bullion is a strong lure for those looking for the best investment to park decimated market funds. However, putting your precious metals investment in platinum could prove to be very lucrative as the relevant markets change.

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Arthur McGuire

March 1, 2009