PLATINUM
Platinum was discovered in South America by
European explorers in 1735. The metal was used in jewelry and religious
ceremonies by pre-Colombian Indians. Platinum is a difficult-to-mine
natural substance that is normally accompanied by small quantities of iridium,
osmium palladium, ruthenium, and rhodium, all belonging to the same group of
whitish metals. the alluvial deposits can be found in several mountain
ranges throughout the world, but the prime suppliers are South Africa and
Russia. Platinum deposits are also present in the western American states
and in Canada, near Ontario. The challenge of mining platinum comes
because there is usually only one part of the platinum metals in two million parts
of the other ores.
Platinum, itself, is a beautiful silvery-white
metal, when pure, and is malleable and ductile. The metal is extensively
used in jewelry, wire, and vessels for laboratory purposes. It is also
used for electrical contacts, corrosion-resistant apparatus, and in dentistry.
The metal has also found a role in coating
missile nose cones and jet engine fuel nozzles, which must perform reliably for
long periods of time at high temperatures.
The price of platinum has varied widely; more
than a century ago it was used to adulterate gold. It was nearly eight
times as valuable as gold in 1920. The price in January 1990 was about
$500.00 an ounce. This summer, as of late June, 2006, platinum was trading
at just under $1200.00 an ounce. By September, that figure could easily
hit $1300, according to precious metal brokers.
The Platinum Guild International claims that
since 1992, when it began keeping precise data, the demand for platinum jewelry
has increased an amazing 1500 percent, driven, in no small way, by all those
celebrities appearing in platinum jewelry on all those red carpet and television
screens. Before several major Hollywood award shows, the PGI also sponsors
red carpet jewelry previews. Considering the universal appeal of platinum
among the celebrity set that has to rank as marketing money well spent.
Among the trends that platinum experts predict,
in addition to increased competition from the palladium crowd, is an even
greater use of platinum for bridal purposes. They base this on the
increasing popularity of vintage or classic themes in the fashion and design
world.
The supply situation will always be open to
question. For the immediate future there's enough platinum to go around.
Supplies are projected to total 7.8 million ounces at current rates of
production. That will mark the fourth consecutive year that the world's
platinum supply increased, as measured by the data drawn from a survey conducted
by the independent platinum observer, Mineweb.
Between seven and eight percent more of the metal
is expected to be produced during the rest of this year. But the expense
aspect can be daunting. That's why the CPM Group's (metal consultants)
managing director, Jeffrey Christian, Predicts that the use of platinum by
jewelers will probably be down five percent this year. "This decline
reflect the resumption of the down-turn in the Japanese use of platinum," he
said. Platinum use in China will also be down slightly, despite the
metal's soaring popularity throughout Asia.
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 jewelers 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 rubles. 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, jewelry 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.
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