VW's Mess Affecting Platinum Market
Volkswagen's irregularities are affecting the market of platinum downwards. A global backward trend is behind it all, but VW's mess does have its share of motivation that pushed the price of platinum downwards. The market is way down to the post-Lehman Shock level since February 2009.
The VW problem is affecting the platinum market as the metal is used as the catalytic agent to clean exhaust gas of the diesel engine. In fact, platinum is utilized more for industry than for jewelry. In 2014, 41.2% of platinum production was consumed as the catalyst for automobile and 35.5% for ornaments.
VW's scandal stained the image of a diesel engine and promoted customers' shift from diesel to gasoline - hence the downfall of platinum.
Immediately after the scandal was bared, New York's futures market dropped on platinum. It fell from around $980 per troy ounce as of September 18, 2015, down to $930 - the record low this year.
In Japan, the price of platinum is way low. Tanaka Kikinzoku Kogyo, a gold dealer, reports the platinum price fell below gold for the first time in a year and nine months since April, 2009. "The trend still persists", says Tanaka.
In the wake of VW's irregularities in September, the platinum price hit the record low of 3615 yen per gram on September 29.
While platinum suffers, jewelry stores are booming. Customers are flooding the stores eager to buy platinum bars of 420000 yen each.
Tanka's Ginza store sold in the month July 32 times as much over the previous term.
Tanaka Kikinzoku Kogyo comments to J-Cast News:
"Platinum appears dearer than gold, but its market is rather limited and its market fluctuates to that of gold. The platinum market is therefore rather hard to follow. Customers must have found a signal in the VW problem to buy platinum".
