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Platinum Overview and History
Platinum is a dense but malleable, ductile chemical element with highly unreactive properties classified as a precious metal which has a silvery white appearance. Platinum is represented on the periodic table with the symbol Pt and the atomic number 78.
Platinum forms part of a group of platinum elements with six isotopes that occur naturally. It is considered to be one of the rare elements which are found in the crust of the earth, occurring in some nickel and copper ores in addition to other native deposits.
These deposits can be found in Southern Africa and it accounts for 80% of the world’s production. The rarity of this precious metal is attributed by the fact that only a few hundred tonnes are produced on an annual basis.
Apart from its position as one of the rarer metals, it has several important uses and as a result it is highly valuable along with being a major precious metal commodity.
The early uses of platinum can be traced back as early as 1200 BC where platinum was discovered in the gold which was used in ancient Egyptian burials in the hieroglyphics on a small box from the burial of Shepenupet II.
In modern-day Esmeraldas, Ecuador, platinum was used by pre-Columbian Americans in the production of artifacts consisting of a white gold-platinum alloy.
In South Africa, the tradition of platinum-working can be associated with the La Tolita Culture around 600 BC to AD 200.
The discovery of platinum in Europe was first referenced in the writings of Julius Caesar Scaliger, an Italian humanist, in 1557 as an unknown noble metal which had been found between Darién and Mexico.
When the Spanish first encountered platinum, they saw it as nothing more than a kind of impurity in gold
In 1735 while the Antonio de Ulloa and Jorge Juan y Santacilia were travelling through Columbia and Peru, Native Americans were observed mining platinum resulting in the Spaniards discovering mines with whitish metal nuggets, which they took back to Spain.
This resulted in the establishment of the first mineralogy lab in Spain, in 1748, with the purpose of studying Platinum systematically. The malleability of platinum was discovered in 1772 with the first platinum crucible being produced in 1784.
Platinum group metals are extracted when copper is electro-refined with noble metals settling to the very bottom of the cell as “anode mud”.
Impurities such as nickel and iron can be removed by making use of their ferromagnetic properties in running an electromagnet over the mixture in addition to exposing platinum to high temperatures which melts away impurities without melting the platinum.
Platinum is also known for its resistance to hydrochloric and sulfuric acids to which other substances show a great deal of susceptibility resulting in processes that use these two acids to remove impurities by mixing it with platinum, to recover what remains.
Platinum – Applications
Platinum, with an annual production of around 192 tonnes, is a critical component in a variety of items with around 40% of demands deriving from the jewellery industry where platinum is used in the alloy to produce white gold.
In industrial applications, platinum is used in catalytic converters for automobiles due to the stability platinum presents at high temperatures along with its resistance to corrosions.
Platinum is also used to increase the octane levels present in fuel as it catalyses nitric acid and gasoline. In electronics, semiconductor crystals for lasers are made by using platinum crucibles while magnetic disks for computer hard drives are made from platinum alloys.
In addition to these applications, platinum is also used in:
- The medical industry in pacemakers, aural and retinal implants, in medicine such as carboplatin and cisplatin due to its anti-cancer properties.
- High-temperature thermocouples along with rhodium
- Glass that is optically pure and flat, used in televisions, LCD-screens, and monitors
- Threads of glass for fibre optics
- Electronic connections as a substitute for gold
- The manufacturing of silicones and carbon monoxide detectors, and more.
How is Platinum traded
Platinum, as opposed to gold and silver, has not had an extensive history in being an investment option. Although, as with gold and silver, there are several investment vehicles pertaining to platinum, including:
- As an exchange traded fund on the London Stock Exchange (LSE) with the stock symbol PHPT and on the New York Stock Exchange (NYSE) under the symbols PPLT and PLTM.
- By purchasing platinum bars or coins as a form of investment.
- By opening platinum accounts through Swiss banks which allows for the trading of platinum in a similar manner as with any foreign currency without the trader physically owning the actual metal.
- Futures contracts – platinum can be traded on the New York Mercantile Exchange (NYMEX) along with the Tokyo Commodity Exchange (TOCOM) with contracts consisting of a minimum size of 50 troy ounces and 500 grams, respectively.
- Platinum is also available for investment through spread betting or contracts for difference, commonly referred to as CFDs.
What determines and affects the price of Platinum?
As a much rarer metal than gold and silver, the relatively low supply of platinum is typically accompanied by a substantial price. In addition to this, the price of platinum tends to be accompanied with a measure of volatility with prices susceptible to fluctuations.
The price of platinum is usually correlated by overall economic strength pointing towards investors who have enough capital to invest in and trade the rare metal.
Prices are also determined and affected by the automotive industry and its fate through the production of catalytic converters along with conditions that arise and exist in the few places in the world that dominate the production of platinum, such as South Africa.
South Africa has seen severe economic challenges, vulnerability, and uncertainty, which can directly, though inadvertently contribute to the price of platinum, amidst economic conditions in Russia, which dominates platinum production alongside South Africa.
With the demand in platinum substantially outweighing the supply thereof, prices per ounce recorded for the end of March was set at $844.35 and on the date and at the time that this article was written, the price per Ounce was $836.75.
Due to the low supply and high demand, these prices are susceptible to fluctuations, which causes market volatility and these conditions may not be suited for all traders, especially not traders who do not use trading strategies that accommodate such conditions.