LONDON (Commodity Online): It is a mad gold world! There is only one thing which people see to glitter, that is gold.

But there are some other metals which people don’t consider that they can bring good rewards to them. On such metal is platinum.

According to a report appeared in MarketWatch, platinum’s price premium over gold has been shrinking, but platinum will continue to be a clear winner — topping gold as one of the most expensive and rarest of precious metals.

The report said investors should take notice as the market awaits the potential launch of the first platinum exchange-traded fund in the US.

Platinum prices have climbed more than 36% from their low in early July to trade at highs above $1,500 an ounce on the Comex division of the New York Mercantile Exchange, levels not seen in more than 15 months.

Analysts say that a good portion of those gains are related to speculation over the ETF launch and that much of the rest of its strength has come from the rally in gold.

In some ways, platinum has much of the same prospects as silver, which also has duel characteristics as a precious and industrial metal. Silver trades at a 20-month high and has climbed 73% year to date, far outpacing gold’s percentage gain of about 39% for the same period.

Platinum prices have climbed almost 60% year to date, and still have a long way to go to reach last year’s peak of $2,200.

“Platinum’s strength has to do with several factors, not the least of which is that it, like other commodities, was badly oversold during Q3 and Q4 of 2008,” said Tim Murray, general manager, precious metals marketing at Johnson Matthey.

Anticipation over the potential launch of the first platinum ETF in the United States has also driven the rally. An actual launch would likely further boost demand for the metal, analysts said.

The US platinum and palladium ETF listing applications are with the Securities and Exchange Commission, according to Nicholas Brooks, head of research and investment strategy at ETF Securities.

But ETF Securities’ platinum offerings in London and Japan have shown some spectacular gains. ETFS Physical Platinum , traded in London, is up more than 60% year to date while the offering in Japan is up around 9% since its launch in late August.

ETF Securities now holds 429,035 ounces of platinum and 631,242 ounces of palladium, with platinum holdings increasing by 220% over the past 12 months.

For now, however, platinum is poised to see a supply surplus of 140,000 ounces this year, with growth in Chinese jewelry demand for the metal unlikely to offset a global drop in industrial demand, according to Johnson Matthey.

Johnson Matthey expects net jewelry demand of 2.45 million ounces for this year and autocatalyst demand of 2.48 million.

Paul Walker, chief executive of precious-metals consultancy GFMS Ltd in London, believes that the precious metals investment climate is pushing platinum higher.

At the same time, industrial uses for the metal will remain very weak and world will see an ongoing surplus.

Over the next six months, Johnson Matthey expects platinum prices to see a trading range of $1,280 to $1,550 an ounce.
(SOURCE: MarketWatch)