One of the precious metals that can be traded using CFDs is platinum, and a number of contracts are available as well as well as of course as mining and exploration companies with interests like Johnson Matthey and Aquarius Platinum, which have traditionally appealed to stock market investors.
Platinum is around 35 times rarer than gold and thus findings of the precious metal are rare. The main exploration areas are located in South Africa (largest producer) and Russia (second largest) with Zimbabwe, Canada and South America also having a number of platinum mining fields. The largest reserves of platinum are currently found in the Bushveld Complex, which is North of Pretoria in South Africa.
It is interesting to note that less than 90 tonnes of platinum are used for jewellery, as opposed to 2,700 tonnes of gold, and it takes around 8 weeks and 10 tonnes of ore to produce a single ounce of platinum, against 3 tonnes mined to produce the same amount of gold.
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Platinum is a very tough, yet flexible metal and its unique properties has led to its increasing industrial use, and its increasingly being used for jewellery as well. The metal has a number of industry uses like the automotive, aerospace, electronics and chemical sectors amongst others, most notably in the production of catalytic converters, where Johnson Matthey is a world leader.
The metal also has used in medicine since it is not affected by the oxidisation reaction with blood. It also has superb conductivity, and is suitable for use with living tissue, making it ideal for use in pacemakers. The density of platinum also makes it more durable than a number of other metals, and the metal itself is extremely inert, being resistant to heat and acids with a melting point of up to 1,768ºC.
The use of platinum is also increasing in the production of jewellery as the metal doesn't wear away with time, and although it can scratch, this is simply a displacement of the metal with no real volume lost, as opposed to gold jewellery. It is interesting to note that in Japan platinum is used in most of the engagement rings and over 80% of wedding rings while in the USA the bridal market has also expanded fast approaching 50% today.
Lastly, despite its super strength and density, platinum is still highly pliable, and one gram can be drawn to produce a fine wire extending over a mile in length.
Fuel cells are devices for generating electric power and in this perspective act as batteries. However, as opposed to batteries, fuel cells don't need to be re-charged and will run for an indefinite period of time when supplied with fuel. The cells produce electricity by combining hydrogen (which acts as fuel) and oxygen (from air) and use platinum as the primary catalyst. Most major automobile firms are currently working on this technology and although the demand is still limited, expectations are good for medium to long term growth, initially in stationary fuel cells and later with the commercialisation of fuel cell vehicles.
Platinum is subject to the usual supply and demand curves, with the long delays in developing new mine capacity being a main reason why the sector is expected to continue to be re-rated, as well of course of the simple rarity value in a world of increasing demand (biggest markets are now China, Japan and North America).
Unlike gold, platinum is not used as a hedge in market depressions since its use is widely linked to the production of many key consumer items from computers to cars to catalytic converters whose demand is likely to be affected in tough economic times. Thus, the price of platinum tends to do well in stable economic times (sometimes reaching twice the price of gold) but any downturn on the economic front could easily depress prices.
You can take a position on the price of platinum via CFD trading. The market is quoted on a 24-hour basis at IG Markets except 22.15-23.00 with a contract being the equivalent of 50 troy oz and 3 being the normal market spread.
