However, the annual supply in 2017 was about 8 million ounces (while demand amounted to 7.8 million ounces), so the value of the annual production (or consumption) of platinum is actually larger and amounts to $6.9 billion ($6.7 billion). It clearly shows that the stock-to-flow ratio is lower than in the case of gold or silver, implying that platinum is mainly an industrial metal.
Hence, only a tiny percentage of platinum is used as an investment. In 2017, it was only 3.4 percent of the total demand, or 265,000 ounces. So, the platinum which is a part of the financial market is worth only about $228 millions. We clearly see now that the platinum market is much smaller than the gold or silver market.
But we can also interpret and measure the size of the platinum market in terms of its liquidity. According to the London Metal Exchange, about 7,000 ounces of platinum worth $6 million were traded daily on average in October 2018 at the London market. If we add futures and silver ETFs, the trading volume would be even higher, but still rather limited compared to gold or even silver.
To sum up, the platinum market is small and rather does not constitute an important financial market in the modern economy. Given its size and liquidity, platinum is clearly not a monetary asset, in contrast to gold or even silver, but an industrial metal. Limited holdings of platinum imply that its price is much more sensitive to the balance of the annual demand and supply.
We encourage you to learn more about the platinum market – not only how large it is, but also how to successfully use platinum as an investment and how to profitably trade it. Great way to start is to sign up for our Gold & Silver trading Alerts. If you’re not ready to subscribe yet and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!
