Category Archives: Other Precious Metals

Asteroid Mining: Fact or (Science) Fiction?

By Douglas Trinder, Precious Metals Analyst

As our planet?s precious metal reserves tap out, big business and NASA are looking to the skies. The race to mine asteroids swirling around our solar system is on.

Space mining may sound like science fiction, but it?s real, and big developments are planned in the next decade.

Why mine asteroids for metals

Asteroids are essentially massive rocks that orbit the sun, and many are thought to consist of gold, platinum, iron and other useful metals.

A single mile wide asteroid could contain many times the Earth?s annual mining output of gold and platinum, according to recent research conducted by the Massachusetts Institute of Technology.

Conventional wisdom may be that going to space to bring back what is needed on Earth is not economically feasible.

Not necessarily so, analysts insist.

Asteroid mining could lower price of metals

A recent Goldman Sachs report states that ?while the psychological barrier to mining asteroids is high, the actual financial and technological barriers are far lower.?

Proponents say before long robots could be traveling to asteroids to extract gold, platinum and other valuable metals to haul back to Earth.

A 2012 Cal Tech study suggests that it could cost $2.6 Billion to capture an asteroid and bring it into orbit near the earth, making human exploration and robotic mining that much easier.

The study also predicts the eventual result would be far lower costs, stating, ?Successful asteroid mining would likely deflate the price of any metals successfully mined and returned to Earth.?

Current & future asteroid explorations

In 2016 NASA launched the OSIRIS-REx spacecraft on a seven-year mission to a carbonaceous asteroid named Bennu.

The spacecraft will map the asteroid for over a year and then move in close to allow a robotic arm to extract several ounces of material to return to Earth for analysis.

OSIRIS-REx spacecraft asteroid mining mission

The OSIRIS-REx spacecraft is currently on a mission to an asteroid named Bennu. A robotic arm from the spacecraft will extract a small sample of material to bring back to Earth for study. [Image: NASA]

NASA also plans to launch a robotic mission within the decade sending the devices to explore asteroids near Mars and Jupiter. This mission is scheduled to launch in 2022 with a planned arrival at an asteroid known as 16 Psyche by 2026.

16 Psyche is supposedly a massive hunk of precious metals including gold, platinum, iron and nickel. Its potential value in the quadrillions of dollars has grabbed the attention of numerous entrepreneurs and investors.

Asteroids offer rich opportunities

What gives asteroid Psyche great interest is that it is made of exclusively metal.

Every world explored so far by humans (except for gas giant planets such as Jupiter or Saturn) has a surface of ice or rock or a mixture of the two.

Because we cannot see or measure the Earth?s core directly, asteroid Psyche and others offer a unique window into the violent history of collisions that created terrestrial planets.

It also may offer entrepreneurs and investors the opportunity of a lifetime, mining precious metal rich asteroids.

Is Platinum a Better Buy Than Gold In 2017?

If your motivation for buying precious metals is primarily for speculative reasons, may I suggest that you consider platinum bullion?

Despite platinum being less liquid than gold and silver as well as the higher buy/sell spread associated with physical platinum, the argument could be made that platinum currently offers more profit potential than gold.

Platinum Now Cheaper Than Gold

Many investors are familiar with the gold/silver ratio and that the ratio recently suggested that it was time to buy silver. But platinum, the “rich man?s gold,” has also seen its price fall relative to gold.

In fact, platinum is now cheaper than gold, an extremely rare occurrence over the last 100 years. That fact alone suggests that platinum should outperform gold over time.

platinum great value 2017

The United States Mint sold out of its first run of 2017 1oz. Platinum Eagles (above) in a week earlier in January.

Platinum is the world?s third-most actively traded precious metal and there is substantially less of it than either gold or silver.

Platinum is arguably more useful than gold. It is used in jewelry, LCD monitors, dental equipment and has strategic and military related uses as well.

Increased defense spending under the Trump administration would likely increase demand for platinum and have a positive impact on its value.

However, the most significant source of demand is the auto industry. It uses about 40% of the global supply, primarily in the manufacture of catalytic converters.

Rarity of Platinum

Platinum prices fell over 25% in 2015 while effectively breaking even in 2016. Both gold (up 6%) and silver (up 16%) outperformed platinum in 2016.

Supply and demand ultimately determine commodity prices so it?s important to understand how much platinum is available and how much is needed. Platinum is quite rare, so the supply is very limited.

That explains why it?s historically been so expensive. Although figures are not yet available for 2016, approximately 6 million troy ounces of platinum were mined in 2015, a nearly 20% increase over 2014 figures and a five year high as well.

Valcambi Suisse 1oz. platinum bars are a popular option for platinum investors.

To put that figure in perspective, approximately 102 million troy ounces of gold were mined in 2015. The amount of platinum mined in 2016 was anticipated to be about 5% less than 2015 due to less production from South Africa.

South Africa accounts for roughly 70% of the world?s supply of platinum while Russia and North America account for most of the balance. This decrease in production may be offset by platinum recycling, mainly by the jewelry and auto industries.

The net result is that the above ground platinum inventory is expected to trend slightly lower in 2017 as it has from 2012-2016.

Higher Platinum Demand Expected

However, an increase in demand for platinum has been predicted for 2017.

Noted refiner and catalytic converter manufacturer Johnson Matthey recently issued a report forecasting a 2% increase in platinum demand for the automobile industry and a 5% increase in platinum demand for all other industries.

An approximate 800,000+ troy ounce platinum shortfall is anticipated this year, somewhat higher than prior year?s shortfalls.

2017 will be the sixth consecutive year that annual demand exceeds the amount of mined platinum for the year. Above ground platinum holdings are confirmed to be in decline based on published statistics from all known platinum databases.

With more platinum demand than supply, and prices at historic lows compared to gold, don?t be surprised if platinum outperforms gold over the short-medium term.