Platinum is a precious metal as well as an industrial metal, and its prices are dependent on economic supply and demand factors as is the case with other non-precious metals. However, since the supply of platinum is very limited, platinum prices are unstable as compared to other industrial metals. Other important factors that may influence prices are the policies in the most important producing countries' in particular, South Africa and Russia. Prices of other precious metals, such as gold and silver, can also influence the price of platinum.
The reference price for platinum is the London Fix, which is usually considered as the international benchmark for platinum prices. The fixing is transmitted by international press organizations, and industrialists and producers all over the world use it as a benchmark.
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The fixing procedure starts when the chairperson announces an opening price to members, which is then transmitted to members' customers. When the dealers receive their customers' orders, members declare themselves as a buyer or a seller and state the amount that they wish to trade. Prices are adjusted accordingly when the amounts do not balance, and the process is repeated.
The price changes in platinum are volatile as small changes in supply and demand can lead to drastic changes in prices. The price of platinum not only varies according to its availability, but it normally costs approximately twice the price of gold. Platinum prices reached a peak in the year 2006 with an all time high of one thousand and seventy four dollars per unit in the speculative market. On the other hand, platinum bullion prices hover around the one thousand two hundred dollar mark per unit.
The price of platinum may hit new historic heights before the end of 2006, but increased production will help reduce shortages of the metal, according to some market experts. The price of platinum has risen about 15% since the start of 2006, and, thus, this metal presents a good investment opportunity for buyers.
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