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By Leia Michele Toovey- Exclusive to Platinum Investing News

Platinum has shed 45 per cent of its value in just nine months. 

In March 2008, the metal used chiefly as a component of auto catalysts topped out at $2301.50 per oz.  Last Friday, the spot price of platinum hit a low of $812.75 per oz. Now, for this first time in 12 years gold ^[2] has surpassed platinum in value.

As investors have fled the platinum market, they have flocked to gold as a safe haven. Last Thursday, the momentous occasion of gold surpassing platinum occurred as gold purchases gained extra impetus as the U.S. dollar ^[3] tumbled and oil rallied ^[4]. Platinum demand has been fundamentally, and psychologically, influenced by a stalling world auto market. Automakers account for about a half of global platinum consumption. The difficulties faced by U.S. automakers may worsen the demand outlook; however, according to an analyst with Johannesburg based Standard Bank, a rebound in platinum prices may not happen even if the pending bailout is approved. Even if General Motors gets a bailout, they still need to sell cars and the demand is simply not there.

Analysts are claiming that with gold higher in value than platinum; platinum is a great buy. As the economy starts to get traction, platinum prices are bound to take off, as historically platinum is rarely ranked below gold in value.  The two metals have zero overlap when it comes to use and physical demand.  Looking forward, one key factor to consider is that platinum supply is plagued with disruptions. Primary producing region South Africa continues to have problems supplying platinum, due to labour disputes and power shortages.  These are problems that have yet to be fixed, and in fact the attention has been turned away from those issues in the recent commodity collapse.  South Africa's woes have meant volatile price swings for platinum. Many analysts anticipate that there will be an influx of investors in the market keen on playing the ratio between gold and platinum from a trading point of view.

Company news

Metals miner Aquarius Platinum ^[5] has suspended operations at its Everest mine as subsidence had occurred over an upper decline area of the mine. High rainfalls might have contributed to the accident. Chief Executive Stuart Murray said the company had opted on the suspension rather than rushing into a short-term high-risk decline rehabilitation project. The mine will remain shut for at least six months; Aquarius also said as a result it would lay off 1,950 people, the majority of the Everest workforce. "The suspension of operations also places the least strain on the South African business as a whole at a time of low platinum group metals prices," Murray said in a statement. Aquarius said based on production for October and November and estimates for December, platinum or PGM production at its Roundel and Marikana mines would rise 6 per cent in the quarter on the previous one, and on-mine unit costs would drop by around 8 percent.  

Zimbabwe's biggest platinum mine Zimplats ^[6] on Tuesday warned its survival was under threat and expected significant losses due to the fall of metals on the international market. "Shareholders are advised that due to the significant fall in metal prices since mid-July, your company's short term viability and survival are under serious threat," Alex Mhembere, Zimplats Chief Executive Officer said in a statement to shareholders. Mhembere added that unless there was a "significant and dramatic recovery in metal prices, the same would apply for the year to June 2009. Due to rough market conditions, Zimplats has been unable to raise enough funds for the Ngezi Phase 1 expansion project which was now at a critical stage.

Anglo American Plc ^[7], the world's biggest platinum producer, is now in cash preservation mode. The company has cut spending plans for next year by more than 40 per cent, reduced platinum output and delayed iron- ore projects as metals prices sink. The company may cut fiscal 2009 capital expenditure by $4 billion, deferring its Minas-Rio iron ore project in Brazil, Los Bronces copper mine expansion in Chile and Quellaveco base metals development in Peru.