Thursday, February 14, 2008

Why Platinum Prices Should Matter To You

Platinum prices have reached an all-time high at over $2K an ounce. The official reason is a drop in supply due to some mine problems in South Africa. But more generally, we are seeing metal prices skyrocket around the world. The reason--overconsumption. It is exactly the same as price changes in oil. There is a limited amount of resources on the planet. More and more people want to use those resources. Thus, the price goes up.

We think of oil as a huge deal, and it is. But we think this way because cars play a giant role in our lives in a very visceral way. We pay directly for gas and we love cars. But these other metals are equally important, especially within in a technological global community. The expanding demand for a lot of these metals comes from computers. In fact, it is questionable what computers will be made of in 50 years because a lot of these metals are going to become extremely expensive. Platinum itself is particularly important for cars because it goes into catalytic converters. But it can serve for a discussion of rising prices for metal of all kinds.