Metal Markets Share investment advised

Invest in shares rather than physical gold, platinum or silver, J. B. Were & Son advises in a recent update.

“Shares usually provide an income in addition to capital gains in excess of inflation,” the company says.

For the “dogged investor” in precious metals the company offers the following outlook: gold — short term positive, long-term neutral; platinum — short-term positive, long-term positive; silver — short- term negative, long-term neutral.

No short-term solution is seen by the company for the South African situation.

“White firepower is sufficient to suppress threats from within and from neighbors,” writes the company. “World dependence on the republic’s strategic minerals prevented all but mild sanctions, which is itself an indication of world dependence on South Africa. Because of South Africa’s overwhelming dominance in gold and platinum supply, any strike, riot, death or dispute in that country has potential to pressure gold and platinum prices up.”

Global gold production “is increasing with rapid advances in Australia, Brazil, the Pacific Rim countries and Canada. By 1990 this new production could be enough to upset the delicate supply- demand balance and lower gold prices,” says the update.

“This, however, very much depends upon the size of future Soviet gold sales which vary between zero and 400 tonnes depending on the country’s financial health. Severe winter weather, poor harvests, low oil revenue, Chernobyl disasters and the like all impact on the Russian need to use gold and platinum reserves for ready cash. Demand very much depends upon the U.S.A. and more recently Japan, the rich men of the world.”

Demand for platinum, with its predominantly industrial use, is running ahead of supply, the company points out. “Automotive platinum group use in catalytic converters could increase by 20% to 25% during the next decade, forced by compulsive environmental controls,” writes the company.

“Jewelry will be sensitive to price increases and demand from this sector could shrink in the U.S. but expand in Japan, because of the offsetting strength of the yen. Speculated private hoarding of platinum coins and bars is becoming a significant demand, 9% of world demand in 1985. No substantial private reserve exists and so the potential exists only to buoy the market.”