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Palladium shines brighter in the platinum market

Friday 4th August 2000

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Platinum prices were in the news this year, but palladium was the stellar performer. Palladium is defined as a "rare, hard, white, metallic element of the platinum group."

Michael Hill's Laurie Mayo said it had long been used for an alloy in white gold jewellery, white gold being the traditional metal yellow colour toned down with nickel, palladium or platinum. It also had industrial applications, apparently in nuclear-associated industries.

Mr Mayo said palladium was a cheaper option than platinum but no longer. That comment should not surprise anyone, because the London price of palladium was $US747-757 an ounce on July 21, compared with $US650 at the beginning of July. The London price of platinum was $US578 on July 21, so palladium was about 30% more expensive.

Overseas precious metal market analysts have said platinum (and presumably palladium) would never replace gold as an investment metal, because much more gold is produced than platinum, and platinum is not hoarded.

Mr Mayo said platinum had the highest melting point of all metals and had no impurities. Michael Hill's manufacturing operators welded a setting with a thin piece of platinum plate to produce the desired effect.

An article in the Times in January said South Africa was the main source of platinum, accounting for 70% of worldwide annual production of five million ounces, with Russia producing more than a million ounces. There have been problems with Russian ability to supply the world market, but resumption of full supply was not expected to have much pressure on the price.

NBR Personal Investor cannot claim any deep knowledge of platinum, but some of the Times' information was fascinating.

The metal was 20 times rarer than gold and "it is often said that if all the platinum ever mined were collected, it would fit into a small room." That small space could be applicable, because platinum is a very heavy metal.

The metal was discovered in the Russian Urals in 1822 but it was not until the late 19th century when jewellers' torches were invented that it could be applied to jewellery.

That seemed logical, given Mr Mayo's comment that platinum has the highest melting point of all metals.

As a final, totally trivial, point, but apparently having marketing importance, the Times said Calista Lockhart, who plays TV lawyer Ally McBeal, wears platinum diamond stud earrings and a platinum pendant. We are left to reflect on what would happen to metal prices if the jewellery were palladium.

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