New York (Platts)--28Feb2008

Platinum prices, which had been surging forward at a phenomenal rate
during the past three or four years, have gained further momentum this year
and reached new highs for several consecutive days on speculative buying.
Platinum prices pulled back in recent days, but rebounded Thursday to settle
at $2,154.80/oz.

Based on the NYMEX nearby contract, platinum rose by $296, or 35% in
2006; gained another $381, or 33% in 2007; then soared $633, or 43.5% since
January 2 this year, reaching an all-time high of $2,188.20/oz on February 21.

Platinum prices began rising in earnest a few years ago along with gold,
as these metals were caught up in the commodities boom. Then, as it became
clear that the platinum market was in deficit, the pace of the increase
accelerated. Things really got wacky this year, after South Africa's Eskom
encountered problems that forced it to reduce electrical power supply to
mining companies.

To put things in perspective, Platts interviewed Jeffrey Nichols, chief
executive of American Precious Metals Advisors and an old hat at analyzing
precious metals. He lived through the previous major rally in the 1970s that
culminated in major spikes in early 1980. "It was preceded by years of easy
credit, rapid money supply growth, stagflation and worrisome world events,"
Nichols noted. Nichols is the author of "The Complete Book of Gold Investing,"
published by Dow Jones Irwin in 1987; "How to Profit from the Coming Boom in
Gold," McGraw-Hill 1992; and "Getting Started in Metals," John Wiley 1997.

Asked to comment on the current platinum rally, Nichols noted that "there
are reasons for platinum to have been caught up significantly since
mid-January when the problem surfaced about South Africa's power supply." He
added, however, "Clearly, the advances in the last month or so have been
driven more by speculation than market fundamentals.

"It's true that South Africa's platinum supply will be affected by power
shortages, and this is likely to continue for a few years," Nichols conceded,
then added: "In the last few weeks, I have attributed the size of platinum's
advance to speculative demand. But it's only so far speculative demand can
carry prices. At some point speculators will begin to take profits -- and this
might have already started."

Secondary supply from recycled scrap is responding to the high prices and
is coming back into the market, thereby increasing available supply, according
to Nichols. Also, the decline in jewelry offtake will at some point limit
further rises in prices. In addition, purchasing managers for the auto
industry will probably step back from making new purchases, being aware "that
the extent of this price is based mainly on speculation and not on
fundamentals."

--Ovid Abrams; ovid_abrams@platts.com