Revenue Objectives Int'l., LLC.

Platinum History

Widespread knowledge of the white metal platinum stretches back only a few hundred years, versus thousands for gold. Despite being worked with some skill by South American Indians over 1,000 years ago, not until the Spanish conquest of the New World during the fifteenth and sixteenth centuries did news reach Europe of this new metal. The Spanish first considered it a nuisance because it interfered with their gold mining activities. Platinum’s extraordinary properties did interest European scientists and was noted that it would not “melt by fire or by any of the Spanish arts.” Heavier than gold and virtually impossible to corrode with gases or chemicals, in 1751, platinum was recognized as a newly discovered element. 

Early Use
During the latter eighteenth century, platinum had some industrial uses. It was used to make durable laboratory instruments in Berlin in 1784. In France crucibles for glass production used it, a significant use still today. Platinum also began to impress jewellers and goldsmiths. Leading metal workers, such as Marc Janety, Royal Goldsmith to Louis XVI, and Pierre Chabaneu, of Spain, were using platinum to make expensive cutlery, watch-chains and coat buttons.

Early in the 19th century, new refining techniques increased platinum’s availability. It was soon being used in gun parts, sophisticated batteries and fuel cells, the production of caustic chemicals (the first platinum sulphuric acid boiler weighed over 400 ounces) and the purification of hydrogen.

Platinum from limited availability to money
Increased platinum use was limited by its supply. In 1820, Columbia, still the only major producer of platinum in the world, ceased exporting the metal. Then in 1822, Russian alluvial platinum was proved to be present in the gold fields of the Ural Mountains. The Russian government made platinum into roubles. Over the next 18 years, the Russian government minted almost 500,000 ounces of platinum and, perhaps more importantly, introduced to the world the notion that platinum was like gold, a store of value.

Jewelry
Platinum jewelry remained rare until high-temperature jewelers’ torches were developed. After this, jewellery makers made quick advantage of platinum. As jewelers became more adept at using platinum, it quickly became the diamond setting of choice.

Limited Sources
The sources of platinum production remained limited. The demand for platinum is essentially satisfied by the mining activities in just two regions. The Bushveld Complex, which is just north of South Africa’s capital, Pretoria, produce more than two thirds of the annual platinum supply. The Noril’sk-Talnakh region in the extreme north of Siberia in Russia supplies most of the rest. Russia is the only nation with significant stocks of platinum and many believe that these may be running out.

Platinum Bullion
In 1975, after the Arab Oil Embargo sparked increases in precious metals prices, platinum bars that were small enough for the individual investor to buy were introduced in Japan. With platinum’s huge price changes during the late 1970s and early 1980s interest in platinum bullion investing spread to Europe and the United States. Two platinum fabricators, Johnson Matthey & Co. Ltd., and Engelhard Corporation began to produce one and ten ounce platinum bars.

Platinum Coins
In November of 1983, The Isle of Man, a British Crown Possession, issued a one ounce Noble platinum bullion coin. The highly successful Noble enticed other mints to issue their own platinum coins. During the second half of 1988, Australia (the Koala) and Canada (the Maple Leaf) introduced platinum legal tender bullion coins within three months of each other. Despite the proximity of the launches, both introductions were enormously successful, bringing the level of investment demand to new highs. For nearly ten years, Australia’s Koala and Canada’s Maple Leaf were among the leading platinum coins in annual sales. Not until 1997 was the platinum American Eagle released.

From being the metal that polluted the gold of the Conquistadors to its recognition as being the rarest or even the most precious of the precious metals, platinum’s odyssey has given it the investment performance of a precious metals hedge with the potential of the scarcest of industrial commodities.

Platinum Uses

The Modern Commodity
The number and scope of platinum’s industrial uses have skyrocketed during this century to include neurosurgical and dental apparatus, drugs for cancer treatment, computer and automotive equipment. Indeed, one of every five goods manufactured either contains or is produced using platinum. One of its most essential uses is in auto catalytic converters. Within autocatalysts, platinum converts harmful emissions into carbon dioxide and water. Nearly one third of newly mined platinum is used in this fashion. 

Supply/Demand
New uses for platinum are being discovered almost daily amidst a supply that is extremely restricted. Remarkable difficulties exist in its mining and production, with between 5 and 6 million ounces of new platinum reaching the world market each year, less than 5% of gold production. Estimates of all of the platinum ever mined would fill a room measuring less than twenty-five feet on each side. Mining and refining the metal is an intricate process of extraction that takes about six months.

Platinum’s supply/demand fundamentals are tight. In fact, according to some estimates, were platinum mining to cease today, above ground reserves would last about one year. In contrast, gold reserves would last nearly one quarter of a century. Platinum's supply is tight even during periods of relatively normal mining production. Enough platinum was supplied to world markets last year only after Russia exported considerable amounts of platinum from its shrinking above-ground reserves.

Platinum Coinage and Bullion
Today, a number of prestigous government mints strike platinum bullion. After 100 years of no investment options, the platinum investor now can choose between legal tender coins, bullion bars, exchange traded futures and options or even various numismatic coin products. However, while the development of platinum as an industrial, jewelry and investment product has been an interesting one, the white metal’s most exciting advances may lie ahead. As trade barriers have fallen and command economies have been privatized, we have seen the acceleration of economic growth throughout the world. What makes this so exciting for platinum investors is that, in contrast with gold and silver, as countries become wealthier, they spend an increasing share of their wealth on platinum. This phenomenon is most clearly seen in the recent rapid spread of catalytic converter legislation to many emerging markets that, heretofore, consumed only insignificant amounts of platinum.

From being the metal that polluted the gold of the Conquistadors to its recognition as being the rarest or even the most precious of the precious metals, platinum's odyssey has given it the investment performance of a precious metals hedge with the potential of the scarcest of industrial commodities.

Not Legal/Accounting Advice