Industrially exposed precious metals are looking attractive relative to Gold

UNITED STATES January 28 2015 8:37 AMTweet 
NEW YORK (Scrap Register): The ECB’s commitment to create inflation, if successful, should benefit gold but it could be more beneficial to the other more industrial cyclical commodities and precious metals, most notably platinum, said ETF Securities.

Despite nearing recession, European auto sales increased 1.4% in 2014 which was the first annual increase since 2011 (see chart on page 2). Pent up demand appears at play as vehicles last only so long. Platinum is the primary catalyst for diesel vehicle emission controls and Europe is the world’s largest diesel market.

Platinum is also currently priced at a discount to gold, which historically has provided good support for the platinum price.

ETF Securities estimates the marginal cost of production for platinum near $1,400/oz. and there have been rumblings of labor unrest again in South Africa, the world’s largest producer. At some point, the prevailing supply/ demand deficit in platinum should be alleviated with a price adjustment higher.