Platinum

What is Platinum?

Platinum is a member of the platinum group of elements. It has six naturally occurring isotopes. Platinum is one of the rarer elements in the Earth’s crust. It occurs in some nickel and copper ores along with some native deposits, mostly in South Africa (hich accounts for 80% of the world production).

Platinum is scarce in the Earth's crust, so only a few hundred tonnes are produced each year. As a result and given its uses, Platinum is regarded as a major precious metal commodity.

Uses of Platinum

The most common uses of Platinum is:

  • In jewellery
  • In computer hard disks and thermocouples
  • In catalytic converters for motor vehicles
  • As a catalyst for the production of nitric acid, silicone and benzene
  • As a catalyst to gain greater efficiency in fuel cells
  • In making optical fibres, LCD's, turbine blades, spark plugs, pacemakers and dental fillings
  • In the composition of chemotherapy drugs

Risks of Platinum 

Like any futures contract, there is always the possibility that the underlying asset i.e. platinum will move in the opposite direction to which you hold your contract. For example: you have taken a long position (expecting the price of platinum to rise), if this were to happen and the platinum fell in price, your long position in platinum will decrease in value.

With any commodity, supply and demand will affect the price dramatically if there is a change, this risk is one that should be monitored on a regular basis and adjusted to suit your risk parameters.

Mining of metals has an inherent risk with the level of costs associated with extracting the product from the earth. This can include, but not limited to: the cost of oil to fuel machinery, cost of labour or new tax regulations being implemented.

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