How to get into precious metals market
The precious metals industry is a hot topic on the minds of many Australians.
The market for gold, platinum and palladium is worth $1.8 billion per annum, but the market for precious metals is worth less than $600 million, according to a report by the Australian Financial Review.
The research, which looked at the market in 2013 and 2014, showed that the value of the precious metals business in Australia was $7.6 billion.
The report noted that the industry was worth around $500 million less in the 2015 financial year than in the previous year.
“The gold, silver, palladium and platinum markets are not particularly healthy,” analyst Chris Woodford told the Financial Review in an email.
“There are some signs of improvement in the current quarter, but in the medium term there are risks.
Gold is undervalued by up to 20 per cent and platinum by more than 50 per cent.””
Silver, gold and pallium are also at risk.
Gold is undervalued by up to 20 per cent and platinum by more than 50 per cent.”
Woodford said there were some signs that some precious metals were being priced below their intrinsic value.
“Gold is well above its intrinsic value, platinum is well over its intrinsic price, and palladin is at risk of undervaluing, which would potentially affect the market price,” he said.
“Silver is being priced lower and palladins price is higher than it was in 2014.”
If precious metals prices are to stabilize, then they should fall further.
“As the gold price continues to decline, precious metals will need to be priced at their intrinsic price.”
Aussie precious metals producer ‘a little bit scared’About $US800 million worth of precious metals was traded in the precious metal market in Australia in 2014, according the report, which cited research by the Sydney Morning Herald.
The report said that the annual turnover for the precious materials industry was $US1.4 billion, or $US14 billion in 2013, with a number of mines being closed.
“It is difficult to know exactly what will happen in the next two to three years, given that the mining sector is a little bit nervous about the future, particularly with the ongoing mining downturn,” Woodford said.
“A lot of these mines are still operating at a loss, and there is some uncertainty around the future.”