Commodity Online
JOHANNESBURG: South Africa is one of the largest gold and platinum miners in the world. But between platinum and gold which is winning the race in South Africa?

If reports from South Africa, a major gold producing country, are any indication, the world will always back gold against platinum in the race.

An indication for this was evident in a recent analysis by experts when they said South African gold shares were poised to outdo platinum shares in the first half of 2009.

Analysts said they have found a clear leaning towards South African gold shares away from South African platinum shares. This means there would be more downside risk to platinum earnings than to gold earnings.

And, this seems to be the beginning of a much better performance for South African gold sector stocks.

Potential gold-earning increases would be driven not only by price but also by production, which made for a better investment case for gold.

Whereas, South African platinum stocks will reflect the decline of the platinum price basket well into 2009.

Many of the major platinum producers will post losses in 2009, bringing platinum’s multiyear bull-run to an end.

Although the average fourth-quarter gold price was down 9% from $871/oz to $796/oz, the weaker South African currency delivered a 17% rise in the rand price of gold from R216 000/kg to R253 000/kg.

The outlook was further enhanced by the usual strong production in the final quarter, when mine personnel pushed hard to secure bonuses before Christmas.

For the platinum miners, the second half of 2008 could, however, be split into a reasonable start and a disastrous end.

The average platinum-group metals’ basket price dropped 43% in the second half and a further 35% at the start of 2009.

South Africa and Russia are the two major platinum producing countries. In other places, it is found as a by-product of iridium, rhodium and nickel. The low recovery of just five parts per million from the earth surface makes it more scarce.

Of the total global production of 6.7 million ounces, South Africa produced 5.29-million ounces, Russia 8.80-lakh ounces and North America 3.45-lakh ounces. Transvaal in South Africa, Urals in Russia and Columbia in US are the major platinum producing States.

Despite slipping to second place in the world league of gold mining nations in 2007, South Africa remains a major source of new bullion.

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