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Why is the spot difference in Au Pt not reflected in bullion prices?

JDelageJDelage Posts: 724 ✭✭
in Precious Metals
All,

I was thinking of buying a couple oz of Pt as a way to diversify my PM portfolio. I have never looked at Pt before, so I was expected to see bullion for sale at a small premium over spot, maybe more than gold given the much smaller volume, but still something making sense. Instead of that, I find Pt bullion selling at prices very close to that of Au. In fact, at APMX, the Pt Maple Leaf coins are more expensive than the Au ones.

Why is that? Is it just that Pt bullion doesn't have enough volume to track spot prices precisely?
"The greatest productive force is human selfishness."
Robert A. Heinlein

Comments

  • cohodkcohodk Posts: 19,101 ✭✭✭✭✭
    Probably because dealers hold PT at much higher prices and are unwilling to sell at a loss.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • WeissWeiss Posts: 9,941 ✭✭✭✭✭
    I'd be interested in responses to this question, too. The reason I seemed to be getting no bites on my offer to trade Au for Pt several months back, and why my dealer finally and reluctantly agreed to the trade.

    We are like children who look at print and see a serpent in the last letter but one, and a sword in the last.
    --Severian the Lame
  • derrybderryb Posts: 36,792 ✭✭✭✭✭
    MHO: Spot prices are heavily influenced by paper trading. When a physical holder/seller sees paper trades drive the price of his physical holding down on a particular metal he is less reluctant to reflect that price reduction in his prices if he feels it is does not truely reflect the value of what he holds, particularly in a long term bull market. The same holder/seller will apply this pricing philosophy differently to different metals he holds. I'm thinking platinum holders/sellers truely feel the spot price is heavily undervalued and not so undervalued for gold. Also, there is much more competition in selling gold and a greater need to honor/recognize gold spot.

    "Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey

  • BaleyBaley Posts: 22,660 ✭✭✭✭✭
    I think it's a supply-and-demand thing, and you see it with gold and silver, too.

    junk (ugly), metals, and in quantity, sells closer to spot, while Beautiful, assayed, minted (neat) metal sells for more than spot, maybe multiples of spot.

    Witness brand new silver in the shape of a dragon coin sells for double or triple spot. Brand new ASEs in sets of five oz. sell for $750. Old "poured" bars in 2, 3, and 7 oz sizes are worth multiples of spot. Heck, even junky old silver dollars sell for multiple spot if some entrepreneur "remints" them as fantasy coins with dates like 1964 and 1909

    Are you looking at beat up pieces of platinum, or beautiful somewhat collectible coins with a numismatic component to the value?

    PS: want to buy some scraps of platinum wire and jewelry manufacturing trimmings for 1% under platinum spot? Neither do i.. not "liquid" for the average person

    Liberty: Parent of Science & Industry

  • jmski52jmski52 Posts: 22,822 ✭✭✭✭✭
    You might have a little better chance of coming closer to spot on ebay, but always take a look at the seller's feedback first.

    Platinum premiums have been pretty high for awhile now, and I view it as part of the price of admission. That's not to say that they couldn't evaporate at any time.

    I agree with cohodk. Plus, there is some minor degree of illiquidity with platinum - but it's not that bad, really. Since physical platinum isn't as heavily traded as physical gold, and since a fair percentage of physical platinum may have been bought in the runup to $2,200+ prior to the Feb. '2008 crash down to $800, there might not be as many holders willing to sell at current paper spot prices. As time goes by, this reserve will eventually leak out into the market at prevailing prices.

    From my point of view, the extremes didn't affect my buying or selling much because my plan has been to buy when the money is available and to sell when I need cash (with a sprinkle of budgetary forward-planning thrown into the mix). To be sure, it gets harder to justify a purchase when prices are way up, just as it gets harder to find "the right stuff" when prices are down.
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • gecko109gecko109 Posts: 8,231 ✭


    << <i>All,

    I was thinking of buying a couple oz of Pt as a way to diversify my PM portfolio. I have never looked at Pt before, so I was expected to see bullion for sale at a small premium over spot, maybe more than gold given the much smaller volume, but still something making sense. Instead of that, I find Pt bullion selling at prices very close to that of Au. In fact, at APMX, the Pt Maple Leaf coins are more expensive than the Au ones.

    Why is that? Is it just that Pt bullion doesn't have enough volume to track spot prices precisely? >>







    Credit Suisse Pt bars can be had for just 3% ($49) over spot right now on Tulving. There is no "tracking" or "volume" or "physical shortage" problems. Its just that SOME platinum products sell at higher premiums than others. Credit is about as safe as it gets in metals....a quality pt product at an insanely low premium!
  • JDelageJDelage Posts: 724 ✭✭
    Tulving requires large amounts. Not an option for a few oz.
    "The greatest productive force is human selfishness."
    Robert A. Heinlein
  • gecko109gecko109 Posts: 8,231 ✭


    << <i>Tulving requires large amounts. Not an option for a few oz. >>





    Thats beside the point.....the point is that Pt is available for much smaller premiums than gold.
  • WingsruleWingsrule Posts: 3,010 ✭✭✭✭
    Tulving has 1oz Credit Suisse bars at spot + $30, or 1.7%

    I would vote that the much smaller market plays a part in larger Pt spreads.
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