Welcome to illuminati silver, we tell you
the truth about silver. Today is Monday 20th August 2018 and we are
discussing silver vs platinum, how they compare, the size of the market, their uses and whether
one offers a better investment opportunity than the other.
Both platinum and silver have been used since ancient times, dating back to over 3000 BC.
Platinum is a rare metal and does not corrode, discolour or fade with time. Today most platinum
is produced in South Africa, with the global annual output of platinum being one 100 times
less than that of silver. Although it is more common, silver was at one stage considered
more valuable than gold and was even used as currency.
Platinum is used in catalytic converters, laboratory equipment, electrical contacts
and electrodes, platinum resistance thermometers, dentistry equipment, and jewellery.
Silver too has a plethora of uses, including jewellery, solar panels, photography, medicines,
electronics, plastics, detergent, water purification as well as a monetary metal.
As prices currently stand, platinum today is $793 an ounce and silver is $14.69 an ounce.
We smile a little because in preparation for this video we looked at our videos on Platinum
back in 2015 where earlier in that year Platinum was over $1,000 and we said prices would fall
further, then that September they were $932 and we said prices would go lower and then
again in November when prices were $846 we said this was not low enough – this was
a brave statement as our counterparts and so called experts were saying that this was
a ridiculously low price and will skyrocket from these levels. Whilst they did recover
a little for a short while, all the economic signs were there for a further fall and now
with prices at $793 we feel vindicated. We said the same about silver when it was just
$15.50 and it fell to $13.50 that year and today stands only $1 above that level. Oh
how many people stated when silver rose from that low, that we were now on a bull run with
silver heading for its all time high at $50 and frankly our analysis just simply could
not justify it, to be frank it even failed the justification for it to rise to just over
$20 which it did in August 2016 and once again we feel vindicated. But enough of us lets
get back to platinum and silver. While at first glance both silver and platinum
appear silver in colour, the two metals are actually easily discernible to the naked eye.
Both have grey undertones, unlike white gold which has a warmer, yellow undertone, but
platinum is much brighter and shinier and silver has a duller, grey appearance.
• Silver is a soft metal that wears down quickly and tarnishes easily. One of the biggest
advantages of platinum is its high melting point, making it hard enough to not require
any alloys. • Silver is one of the most affordable jewellery
metals. It’s also great for costume jewellery that goes in and out of style.
• Platinum is one of the most expensive metals for jewellery making, second to rhodium,
which is typically only found as a coating over gold to increase its durability.
• Platinum is a metal of choice for jewellery wearers with sensitive skin. It’s naturally
hypoallergenic and shouldn’t cause any skin irritation.
• Platinum used to be the most expensive of the precious metals (though we have now
seen it fall considerably below gold’s price) –This was due to a number of factors, including
its rarity, higher levels of purity when used in jewellery, and the complex level of expertise
and tools required when crafting jewellery from platinum. In addition, Platinum and its
sister metal palladium are widely used in catalytic converters that reduce harmful emissions
from automobiles. Platinum is used in converters for diesel engines, while palladium is used
for engines that run on gasoline. • Silver, on the other hand, is the most
affordable of the precious metals. This makes it ideal for costume jewellery and larger
statement pieces. Of course, our listeners are well aware of the other uses of silver
whether it be in electronics, medicine, white goods, mirrors and solar panels and many other
applications. So, one of the questions we are often asked
is which is the better investment, silver or platinum. Now whilst we do not give investment
advice, there are a few factors which we can cover very easily and are obvious to observe.
1. Silver to platinum ratio is 54:1 this means that for every ounce of platinum you can buy
54 ounces of silver. This makes silver more easily affordable and provides the potential
for significant gearing. What do we mean? Well when gold reached its peak in 2011 at
approximately $1900 (we are rounding up figures to make the maths easy here) platinum also
stood at $1900 and silver touched $50. So let’s suppose these metals went back to
those prices just after you had invested $10,000 in them at today’s price. Well your platinum
holdings would be worth $23,959 while your silver holdings would be worth $34,036 a $10,000
difference in favour of silver. Now whilst we cannot say for certain that
all of these will go back to the same price they were 7 years ago, you can see the gearing
effect that buying silver has. 2. In addition Platinum’s all time high
was $2162 (back in 2008) while silver was $50 (albeit for a brief moment) so one could
argue that platinum currently standing at 36% of its all time high while silver stands
at 29% of its all time high silver has further ground to make up as a percentage, or in other
words its at a greater discount than platinum and therefore offers better value.
3. Now let’s suppose you decided you were going to go out and purchase a platinum coin
and silver coin from an online dealer – let’s say a silver eagle which would cost you around
$17 and a platinum American eagle around $875. So, the silver premium over spot is $3 or
20% and the platinum premium over spot is $82 or 10%. So percentage wise platinum seems
to offer the better deal, but when you compare it to gold where the premium is between 3-4%
which is more than half that of platinum its worth putting this into perspective).
So far therefore it looks as if silver is offering the best potential for investment
purposes. But what we haven’t addressed so far is supply vs demand. Now we have mentioned
in our recent videos on silver that although there is a supply deficit compared to demand,
there is enough above ground stocks to ‘mop up’ this deficit for the next 10 – 20
years. But what is the situation with platinum? Well according to the World Platinum Investment
Council Report published in March of this year, which incorporates analysis of platinum
supply and demand during the first quarter and full year for 2018, they predict:
a. supply will tighten in 2018 compared to 2017, with South African mine supply falling
in Q1 to its lowest level since 2016. b. Global demand for platinum is forecast
to be marginally up for the year, despite a fall in total global automotive demand,
with growth in commercial vehicles insufficient to offset lower demand from passenger cars.
c. These fundamental shifts will contribute to a reduction in the level of overall surplus
for the year, down to 180 koz from a revised surplus figure of 315 koz in 2017. Q1 2018
was in fact in deficit by 125 koz. d. Key highlights include a predicted recovery
in both jewellery and industrial demand for 2018. Global demand for platinum jewellery
is predicted to climb by 2%. This will be powered by strong global economic growth,
alongside continued demand from India as larger retailers with multiple stores gain market
share from the independent sector. Demand from China is predicted to increase as a platinum
campaign to target millennials bears fruit. e. An increase in industrial demand (+60 koz)
is expected to be fuelled by requirements from the petroleum industry, with use in refining
up, led by the recovery in Japan. f. In line with previous forecasts, investment
demand is predicted to be 250 koz in 2018. Demand in the first quarter of the year was
buoyed by strong bar and coin sales, helped by the release of the US Mint’s bullion
and proof platinum American Eagle coins. Now that was quite a mouthful.
So, in summary they forecast that Global platinum demand is expected to increase marginally
this year, based on a 2% recovery in jewellery demand in Asian markets, as well as a 6% demand
increase for industrial applications. This combined with a 2% decline in supply, owed
to mine closures in South Africa, will result in a tighter 2018.
Now with regard to above ground stocks there is some debate amongst professionals – ranging
from 3-5 years surplus to 5-10 years surplus, but much less than silver’s. So certainly
as far as this body is concerned, it is positive about the future for Platinum.
So why have we seen platinum prices fall? Well the diesel fiasco involving Audi cars
and others, plus the trend away from diesel automobiles, a lack in investment demand in
2017 and of course the significant rise in the value of the dollar have all taken their
toll. So what of the future. Well at current levels
platinum prices are low and appear quite cheap. Of course, if the dollar strengthens further,
then we can expect to see prices fall from these levels. Having said that, certainly
in view of the relatively robust recovery, platinum demand seems to have experienced
this year, and with mine supply falling further, it is certainly a metal that is open to an
attractive price rise in the relatively near future. However, before you rush out, sell
your home and purchase all of the platinum you can, also take into account, the potential
for rising interest rates and a higher US Dollar; the larger premiums charged for platinum
coins compared to gold but lower than for silver, and also whether you believe that
the world’s economy still has significant growth potential; for without it, like silver,
the industrial demand will fall. As far as we are concerned in the UK like silver, platinum
attracts an additional 20% VAT rate charge and so apart from perhaps purchasing a few
coins as part of a collection, we would prefer to purchase gold instead as it attracts no
VAT and still believe that slightly lower prices are lurking ahead, though we are not
enormously far from the bottom. We hope you have found this video interesting
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updates and offers. Disclaimer:
Illuminati Silver owners come from a background of Banking, International Wealth Management
and Economics. Having now retired from these worlds we are not qualified to give investment
advice. Therefore, this and other productions must not be deemed to be giving such advice
and merely represent the personal views of its owners.