Considering the Platinum Price

What does the world financial crisis have to do with decreased production and the platinum price? Basically, it has everything to do with it. Let’s first look at the patterns in the platinum price over the past three years, and then consider why it has behaved in the way that it has.

In 2008, the world’s big financial problems started. This was the time when the mortgage market began to collapse. As this transpired, there were a large number of financial institutions, corporations, and even individual investors immediately affected by the issue. As the momentum of this collapse increased, it also impacted other major companies, industries, and groups as well.

This caused a stop or substantial slowdown in many areas of production and industry too. One of these areas was in the production of precious metals. This meant that mining of silver, gold, and platinum came to a nearly screeching halt because the industries that used the metals, as well as the financial markets, suddenly had no need or ability to acquire them.

You can see this for yourself by looking at a chart of the platinum price around that time. For example, in early 2008 you would see prices spike because investors reacted to the first signs of trouble and sought out a safe haven. You then see the platinum price plummet substantially when investors realized that the financial problems were more widespread and that the demands for the metal had almost disappeared.

What about now? If you look at pricing for platinum, you would see that the metal recovered and increased in value at a much more moderate and positive pace. The reason behind this slow and steady increase is that the world’s economic systems and industries have started to recover, and this means that commercial demands for the metal have started anew. The reason that prices continue to climb instead of just stabilizing, however, is the simple fact that the slowdown in production of platinum has caused a shortage in the general supply.

As automakers begin working at their original pace, and as investors still need some safe haven investments, there is a strong competition for the available supplies. This is going to continue to drive the price of platinum in an upward direction for an indefinite period of time. This means that anyone with holdings will reap the benefits and those investing even now will enjoy some great returns too.

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