Unless 2020 has another twist in store (besides the latest appearance of hammer-head worms in Georgia), we’ll celebrate the Thanksgiving holiday tomorrow.
This year, gold and cryptocurrency investors have plenty to be thankful for. Copper investors as well, as Ted explained yesterday.
Gold made all-time highs, topping $2,000 per ounce in early August. And although it’s given back some gains, gold prices are still up 19% for the year.
Not to be outdone, Bitcoin has been on an absolute tear since September. The cryptocurrency is up 168% on the year.
There are any number of catalysts driving these two assets higher…
You could argue that gold’s safe-haven status during these uncertain times has provided a boost.
Perhaps Bitcoin is emerging as the currency backbone for a digital economy.
But really, their banner year comes down to one thing…
The Driver of Gold and Bitcoin’s 2020 Bull Market
Scarcity.
In a year when the Federal Reserve has created three trillion more dollars, assets that are finite and hard to create have seen their value surge.
But there’s another commodity that shares the same scarcity trait as gold and Bitcoin.
Frankly, it’s a better investment than either. Only, investors have tended to overlook it.
Now, however, there are signs that it’s waking from its five-year slumber, and investors are starting to take notice.
Why Platinum is Set to Soar
Platinum’s presence in the earth’s crust is about as rare as gold. Yet, only six million ounces of platinum were produced in 2018, compared to 109 million for gold.
That’s because platinum is difficult to access. Most platinum mining takes place deep underground. And once the ore is collected, the refining process to extract pure platinum is time-consuming and costly.
This limited platinum production is set to become a big issue and will drive the price of the precious metal higher.
Right now, platinum trades at about $960 per ounce. But I expect platinum to soar 50% over the next couple of years. That’s because of emerging demand from new sources.
You see, gold has limited end market uses besides making jewelry and some use in electronics. Nearly half of all gold ends up with investors or central banks.
Bitcoin’s only source of demand is from investors and those willing to use the cryptocurrency to facilitate financial transactions.
But for platinum, only 13% finds its way to investors.
The rest is scattered among various end markets, with the single largest source of demand being to make your car’s exhaust emissions cleaner.
In short, there’s significant industrial demand for platinum, which is set to explode thanks to the growing push for green hydrogen … but there’s already a shortage this year.
In fact, platinum demand is set to outpace supply by the most on record before we bid 2020 farewell in a few short weeks.
Europe alone plans to invest as much as $550 billion to expand renewable hydrogen over the next 30 years. That’s important for platinum because…
- Electrolyzers extract hydrogen for later use in fuel cells. Platinum’s properties make it ideal in this process.
- Fuel cells use a chemical reaction to make electricity, and platinum is a key catalyst in this conversion.
Yet, despite this surge in demand on the horizon, platinum production has stagnated in the past decade.
That means the supply/demand imbalance will only worsen in the years ahead.
This gives us the opportunity to leverage the boom in renewable energy and profit from platinum’s demand. You can do this with the Aberdeen Standard Physical Platinum Shares ETF (NYSE: PPLT) .
Best regards,
Research Analyst, The Bauman Letter
