London: Gold's premium to platinum, already the biggest in almost two decades, may surge to the highest on record in the next year because of investors' mounting concern about the global economy.
Gold cost 3.1 per cent more than platinum in London on Thursday, compared with an average discount of 39 per cent over the past decade, data compiled by Bloomberg show.
The metal may reach a premium of 26 per cent in the third quarter of 2012, according to David Wilson of Societe Generale in London, the most accurate platinum, palladium and silver forecaster tracked by Bloomberg over two years. That would be the highest in data compiled by Bloomberg going back to 1987.
Prices are converging for the first time since the global economy was in recession in 2008 as investors seek a haven from slumping stock markets and slowing growth.
Platinum is down 7.8 per cent for the year because 58 per cent of supply is used in industry for catalytic converters, glass and chemicals.
Best performer
Gold rose 19 per cent and investors in exchange-traded products hold $121.5 billion (Dh446 billion) of the metal, about 53 times more than in platinum, data compiled by Bloomberg show.
"The ratio is indicating that markets are still concerned about a global recession," said Peter Fertig, owner of Quantitative Commodity Research in Hainburg, Germany, and the most accurate platinum forecaster so far this year in a survey by the London Bullion Market Association. "That's weighing far stronger on platinum than it is gold."
Gold advanced to $1,690.10 an ounce this year, reaching a record $1,921.15 on September 6, and platinum is at $1,632.63 an ounce. Gold will average $2,350 and platinum $1,860 in the third quarter of next year, Societe Generale estimates.
The Standard & Poor's GSCI gauge of 24 commodities fell 5.3 per cent this year. Gold was the best performer, beating silver, which rose 6.1 per cent. The MSCI All-Country World Index of stocks retreated 17 per cent, with almost $12 trillion of market value erased since May, data compiled by Bloomberg show.
Treasuries and gold have become havens for those seeking to protect their assets from the threat that economies will drop back into recession. Treasuries maturing in 10 years or more returned 30 per cent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. The US Mint sold 112,000 ounces of American Eagle gold coins last month, the most since January.
Gold is in the 11th consecutive year of its bull market, the longest in at least nine decades, after investors accumulated 2,236 metric tonnes of bullion in ETPs. That exceeds all except four central banks' reserves, data compiled by Bloomberg show.
Jewellery
HSBC Holdings expects gold to average $2,025 next year, compared with $1,875 for platinum, an 8 per cent premium. When prices converged in 2008, platinum more than doubled in the following 16 months, outpacing gold's 38 per cent advance, as economic growth rebounded. Consumers bought 36 per cent more platinum jewellery in 2009 than a year earlier, the most since at least 1975, Johnson Matthey data show.
Investors remain bullish on platinum and are holding almost a record amount through ETPs backed by the metal. As gold ETP holdings rose 3.4 per cent this year, platinum assets climbed 16 per cent to 43.5 tonnes, and set an all-time high of 45.2 tonnes on Septtember 7, data compiled by Bloomberg show. While gold is within 11 per cent of its record, platinum would have to climb another 36 per cent to reach the record $2,301.50 set in March 2008.
