Commodity Online
TOKYO: Is it time for investors to dump gold and go for platinum? It seems investors are increasingly turning to platinum following a slump in prices and gold slowly losing the safe haven charm.

In Japan, sales of platinum bars have tripled in the first quarter from a year earlier as lower prices boosted demand.

Sales volumes in the three months to March 31 jumped 217 per cent as yen-based prices for platinum bars slumped 51 per cent to $996 an ounce on average in the first quarter from a year earlier.

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However, the platinum rush may again cause a price rise and that may hamper further rise.

Demand from auto sector, which buys around half of global platinum supply for use in catalytic converters, is expected to remain weak. Another factor which helped the platinum rush is the strong Chinese jewellery demand.

In the auto sector, some schemes announced by governments to promote better emission norms vehicles had helped stop the slump car sales. But, nobody knows how far it will help sales.

Car sales in Germany have been supported by an incentive scheme to get people to trade in old cars and buy newer, cleaner, greener cars.

Buying of platinum-backed exchange-traded funds jumped in the first quarter as the metal’s 65 per cent tumble from the all-time high it reached in March 2008 attracted fresh buying.

The price of the white metal slid below that of gold for the first time since 1996 in December, traditionally a signal for traders to buy platinum and sell bullion.

Given the similar characteristics of platinum and palladium to gold, investors can use them as a store of value.

ETF Securities’ holdings of platinum-backed fund jumped 87 per cent during the first quarter. Switzerland’s Zurich Cantonal Bank’s platinum ETF holdings rose 28 per cent in the first three months of the year.

Moreover, a new platinum ETF has been mooted in the North American market by ETF Securities. South Africa’s Absa Capital is planning to launch an exchange-traded note giving clients exposure to the spot platinum price in the second half of 2009.

In Russia, the RTS exchange launched trading in platinum and palladium futures contracts from April 15.