LONDON (Commodity Online): Make way for the new king in precious metals — platinum. Even as the world sings paeans to gold as the most favoured metal in the world, a slow and steady platinum has overtaken gold as the biggest investment grabber in December.

In 2009 everyone seemed to be backing the truck up for gold. But right from the end of 2009 to the beginning of 2010, a change of mind among investors is clearly visible with more of them turning their attention to platinum.

In the past month alone, platinum and its near cousin palladium have climbed 12% and 15%, reaching a peak last week after the launch of two exchange-traded funds in the United States. In the first 10 days of trading, the newly-offered ETF Securities Physical Platinum Shares (PPLT/NYSE) and Physical Palladium Shares (PALL/NYSE) have attracted more than $500-million in assets.

In 2009, platinum rose an average of 60% and palladium doubled. Gold by comparison added just 24%. Silver, another precious metal riding tailwinds, climbed near 45%.

This year, analysts expect precious metals to keep rising, with platinum group metals and silver again forecast to outperform gold. Platinum is expected to surge 29% to an average of $1,553.75 an ounce in 2010.

Even better, palladium will rise 50% to an average of $434 an ounce. Silver is forecast to jump 24% to an average price of $18.50 in 2010, up from 2009’s median price of $14.87.

This year is shaping up nicely as well for gold, with forecasts predicting gold will average $1,150.50 an ounce this year.
 
Most precious metals are benefiting from a low interest rate environment due to accommodative monetary policy, a growing US deficit that is playing havoc with the US dollar and lastly, the growing concerns about inflation as government stimulus fuels the economic rebound.

Demand for platinum and palladium is being aided by its commercial utility in the rebounding automotive sector that absorbs about 30% of the total world supply for the production of catalytic convertors and more recently fuel cells in electric cars.

Again platinum and palladium are two metals people can put their money on. Factors favouring platinum and palladium is that there have been supply curtailments in South Africa, which produces 80pc of the world’s platinum group metals. This is partly because of a result of power shortages, and because the price has been so low, making about 25pc of all the mines in South Africa uneconomical.

With the world focusing on gold, several analysts have started looking for other metals which will beat the yellow metal in the rice race. Gold maintained its apparent ability to defy gravity in 2009, helped by a fall in the dollar.

However, gold actually lagged behind other metals in 2009with the metal rising by only 30pc compared with some other metals which doubled in price.

Considering this factor, many market analysts have also suggested that copper and nickel are expected to offer attractive returns due to emerging market demand.

The price of nickel fluctuated over the course of 2009 but is expected to increase in 2010. Experts forecast nickel consumption will increase by around 7pc in 2010.

The requirement for nickel is predominantly driven by stainless steel production, which is expected to increase by 8pc this year. But steel may not drive up demand for nickel as clearly as those figures suggest.

The reason for this is that there is a degree of substitution for nickel that has been occurring in the stainless steel industry.

Nickel had a terrific run and there is likely to be a crunch in the nickel market this year. A price increase of between 15pc and 20pc could happen.

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