Source: Maurice Jackson for Streetwise Reports 05/29/2018
Jamie Keech of Capital Exploits talks with Maurice Jackson of Proven and Probable about what he sees as the benefits of investing in Platinum Group Metals.
Maurice Jackson: Joining us today is Jamie Keech of Capitalist Exploits. Today we’ll be discussing platinum. Jamie, thank you for talking with me today about platinum. First, tell us about Capitalist Exploits.
Jamie Keech: Capitalist Exploits is a blog that’s run by Chris McIntosh, who is a macro investor. He also runs a small fund called the Asymmetric Opportunities Fund, which he invests his own money in and looks for asymmetric opportunities all over the world. In the last few months, I’ve partnered with Chris and we’re launching a new service for our readers called Resource Insider. Resource Insider is going be focused purely on the natural resources sector, primarily mining and metals. We’re going to be looking for opportunities and recommendations for our readers about how to get the best rewards and the best returns in the mining and metals space.
Maurice Jackson: Since we’re discussing precious metals today, what is your thesis on stewardship of precious metals?
Jamie Keech: I was thinking about this this morning and I put precious metals into two categories. I look at them either as an investment or a store of wealth, and in terms of an investment, I look at it like any other investment. Sometimes it’s a good investment, sometimes it’s a bad investment. If you bought gold or a gold security or ETF at the top of the market in 2012, obviously it would’ve been a bad investment. Today, given the political situation in a lot of places in the world, given the economic situation, given the sovereign debt of a lot of nations, I’m starting to think of gold and other precious metals as a very good place to put money. I get exposure to that mostly through securities and I’ve invested junior exploration companies. I’ve invested in development and operating companies, as well as royalty and streaming companies.
Now, the other way to answer your question is, do you also look at gold particularly, but precious metals in general, as a store of wealth? That’s a totally different ballpark. I would make the case that any serious investor should have some part of his or her portfolio in precious metals, particularly gold, as a way to essentially hedge against catastrophe. If you lacked faith in fiat currencies, having that as a store of your money means you’re not so dependent on any one government or any one country. So the percentage you’re going put into precious metals is really going to depend on your personal portfolio, where you live, your general level of paranoia at the state of the world. But I do think precious metals, and gold in particular, are a very important part of any investment portfolio, as that underlying safety net.
Maurice Jackson: Speaking of gold and silver, that’s what a lot of precious metals investors focus on and they overlook the platinum group metals. For someone new to the fundamentals of platinum, please provide us with a 10,000-foot narrative.
Jamie Keech: Platinum’s a funny metal in a lot of ways or rather I should say it’s a funny precious metal, because it’s the industrial precious metal. Whereas gold is almost 90+ percent used as a store of wealth or in jewelry, platinum’s a lot different. Something like 40% of platinum gets used in the automotive industry, particularly catalytic converters. Another big chunk does get used for jewelry, around 30%, and then there’s 20% in the industrial space such as medical equipment because platinum’s a very sterile metal.
Only 3% of platinum is actually bought and held as an investment opportunity, compared to gold or silver, which are obviously much higher. So that’s the underlying ownership fundamentals of platinum. Now from a high-level perspective, almost all of the world’s platinum comes out of South Africa and in terms of buyers, the biggest buyers are of course the automotive industry and using it for catalytic converters for diesel cars.
Maurice Jackson: Let’s get into the supply and demand fundamentals for platinum. What can you share with us regarding supply?
Jamie Keech: As I was just mentioning, the vast majority of platinum and platinum group metals in general, that includes palladium and rhodium, comes from South Africa. That country produces somewhere in the order of 70, 80% of all platinum group metals. It holds 80% of the world’s platinum reserves. So I think totally there’s about 160,000 kilograms of platinum produced every year. Something on the order of 110,000 of those comes from South Africa. That’s followed at a pretty far distance by North America and then third would be Russia. While platinum does come out of Russia, the majority of the platinum group metals that we’re seeing from there is actually palladium and I believe that Russia is the number one or else a close number two producer of palladium in the world right now. The South African mines are starting to dry up. The cost of platinum has dropped to a level that it’s getting very hard to mine it economically and then you’re seeing these social shifts occurring right now in South Africa that’s putting the industry in jeopardy.
South Africa recently elected a new prime minister called Cyril Ramaphosa. He came in as a very pro-business, pro-development politician, but since that time he’s turned around on that. One of the things that he’s starting to instigate right now is I believe 30% black ownership of the mines. That’s an increase from what had previously been in place. That’s going to stir things up a little in terms of the ownership and the profitability of these mines. And then there’s also really an underlying movement right now from the EFF, which is the other prominent party. I …read more
From:: The Gold Report