Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

The Price Of This Precious Metal Simply Doesn't Make Sense

Summary

The demand for platinum has exceeded supply since 2013.

Supply is down again this year.

Platinum is so out of favor with investors that it hit a significant marker in sentiment.

It’s time to buy platinum.

Platinum

Hello from Vancouver, British Columbia, and the Sprott Natural Resource Symposium. This is one of the premium natural resource investment conferences in the world. As master of ceremonies, I get to see, firsthand, some of the premier experts in natural resource investing.

One of the experts at the conference is my good friend Dr. Steve Sjuggerud. He’s admittedly not a typical natural resource investor. Instead, he finds value in stocks that are cheap, hated … and in an uptrend.

That’s shorthand for sectors that are poised for big rallies.

Supply and Demand

Steve isn’t the only one excited about this metal. Ivanhoe Mines CEO Robert Friedland also discussed its importance.

Platinum production is down, particularly from mines, as you can see below:

Platinum Supply

The demand for this metal has exceeded supply since 2013. Supply is down again this year. However, the price of platinum hasn’t responded the way we expect it to … yet.

The price of platinum now trails the price of gold by over $300. This is a metal that, by all accounts (scarcity, demand, consumption and supply), should sell for a significant premium over gold. It wasn’t even until recently that the price of platinum lagged below the price of gold.

In 2008, the price of platinum hit $2,300 per ounce. The price of gold was just $1,000. Today, the price of gold is $1,250 per ounce, but the price of platinum is just $922 per ounce. That simply doesn’t make sense.

Platinum is so out of favor with investors that it hit a significant marker in sentiment. According to sentiment tracker SentimenTrader.com, platinum is a buy based on its sentiment indicator.

That was exactly what Steve said in his talk: It’s time to buy platinum.

A “Must Buy” Metal

This is an idea that I told you about in my June 6 essay, “This Metal Is (Almost) Worth Its Weight in Gold.”

As I told you then:

The problem is that platinum’s supply is dwindling, while gold is not. Platinum can be recovered from industrial processes by recycling … but it isn’t 100% effective, so we’re losing platinum every year.

I’m not the only one to notice this trend. As I said, two highly respected analysts put it on their “must buy” lists this week at the conference.

It’s easy to buy platinum in exchange-traded funds (ETFs). The highest-quality ETF is the Sprott Physical Platinum and Palladium Trust (NYSE: SPPP).

This publicly traded vehicle actually holds the physical metal. It lists the serial numbers of the bars on its website. (How cool is that?) Even better for us, we can buy the trust at a discount to the value of the metal it owns.

While there are other ETFs out there, this is the best in class.

Good investing,

Matt Badiali
Editor, Real Wealth Strategist