Platinum Boom

Last week platinum sold in the U. S. at $62 an oz. Week before it sold at $53. Week before that it sold at $43. In almost any other commodity such bouncing behavior would have to be explained by good reasons. In platinum it was not explained, for platinum is an unaccountable metal.

It was first found by South American Indians, then in Russia. A century ago the Imperial Russian Government tried coining platinum but it proved too valuable and the coins were melted down by a greedy public. Fifty years ago this greyish white metal sold for $5 an oz., a quarter the price of gold. Then uses for it began gradually to be found, in jewelry, in electrical machinery, in chemistry. Before the War platinum rose to $45 an oz. Russia produced 95% of it, recovered up to 300,000 oz. a year. The War shut off the Russian supply, sharply increased the demand, for platinum is used not only as a catalyst in the manufacture of nitrates and sulphuric acid, but also in the detonating devices of shells. In the U. S. the Wartime price was fixed at $105 an oz., and newly developed deposits in Colombia could not fill the demand. After the War, when price-fixing ended, platinum rocketed above $170. Then in the early 1920's new platinum deposits were discovered in South Africa and in the late 1920's it began to be recovered in Canada's nickel mines as a byproduct. Not until Depression, however, did the price return to $45 and below.

Platinum statistics are half fictional. Experts estimate that there may be about 12,000,000,000 oz. of silver, about 300,000,000 oz. of gold in circulation. They guess that there may exist 6,000,000 oz. of platinum. They have only a rough idea how much is being produced--it may be 300,000 oz. a year--and no one is sure whether the leading producer is Russia or Canada. Colombia and South Africa produce nearly all the rest. The U. S. piddles along with a couple of thousand ounces. Biggest platinum consumer is the U. S. What the rest of the world consumes is wholly guesswork.

The market for platinum is controlled by the selling agencies of a few producers. The big producers in Canada, Colombia and South Africa sell directly to the trade and to jobbers through a handful of agents such as Johnson & Matthey of London and Charles Engelhard, head of Baker & Co. of Newark. Russia sells through Amtorg. With this small field of big sellers and an unorganized field of small buyers no one could tell whether the recent platinum boom was caused by a rush of buying or a reluctance to sell. Last week the air was full of conjectures. Least ominous guess was that there had been a sudden rise in the marriage rate, causing a demand for platinum wedding rings. Retail jewelers in convention last week announced jewelry sales were up 30% from a year ago, sales of diamonds (with which platinum most often goes) up 100%.

Other ideas: Nations are preparing for war. Japan in particular is rumored to have urged its subjects to buy platinum jewelry. England and Russia were reported to be anxious to keep Japan from stocking up on platinum. Japanese buyers were reported offering $3 an oz. premium for platinum in the U. S.

Producers are holding platinum from the market, planning to use it as a hedge against inflation or as a speculation against war. International Nickel, said to have 60,000 to 100,000 oz. on hand, was reported in no hurry to unload at last week's high prices.

Producers have formed an international cartel. New York reported it, London denied it.

Still another suggestion was that the producers had arbitrarily boosted the price to put a quietus on a new form of platinum trading. In Manhattan two months ago a syndicate headed by Alexander Eisemann & Co., assisted by International Platinum Corp., began issuing warehouse receipts against platinum. Buying platinum at wholesale, they had it melted into small rectangular ingots, .995 fine, weighing 3 oz. and so certified by Handy & Harman, well-known assayers. The ingots, each stamped with an identifying number and placed in a small fibre box, were put in the custody of the safe deposit affiliate of Manhattan's Chemical Bank & Trust Co. which issued warehouse certificates against them. The certificates were then offered to the public at a price about 10% above wholesale platinum prices to cover the cost of assaying, ingoting, insurance, the first three months storage charges (5-c- an ingot per month) and the profit and commissions of the offerers. To the public the certificates were offered as a speculation and as a substitute for gold in hedging against inflation.

No love at all have producers for this innovation. They object to speculators interfering in the orderly marketing of their product, perhaps some day dumping their holdings and breaking the price. Another objection from the producers' standpoint is the fact that if any considerable quantity of platinum were held by the public any arbitrary rise in price would be checked by public selling. Last week's sudden rise in platinum prices, whether or not designed for the purpose, put the offerers of platinum certificates in a difficult spot. If they sold much metal at that high price, and the producers suddenly dropped the price, they would get a very bad name with their new clients. Treading warily, the certificate dealers priced their wares at $61.50 per oz.--50-c- under the wholesale price--and limited sales to small quantities.

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