Will Military Spending Drive Up Platinum Prices in 2019?

If you are investing in platinum, chances are you are thinking about military spending these days. You know that platinum is widely used in armaments and military aircraft. So, if U.S. production of armaments and planes that will be sold in Saudi Arabia is cut back, will that make the price of platinum drop?

We don’t think so. Demand for platinum should keep high, and possibly increasing. And even if sales of arms to Saudi Arabia drop or disappear, the overall impact should only affect prices slightly. In fact, the trading price of platinum, which is currently low, seems poised to trend up.

Let’s Compare Military Spending and Platinum Prices in the Last Decade

  • 2010 – The U.S. defense budget was $721 billion. The average platinum trading price was about $1,500

  • 2011 - The U.S. defense budget was $717 billion. The average platinum trading price was about $1,700.

  • 2012 – The U.S. defense budget was $681 billion. The average platinum trading price was about $1,500.

  • 2013 - The U.S. defense budget was $510 billion. The average platinum trading price was about $1,600.

  • 2014 - The U.S. defense budget was $614 billion. The average platinum trading price was about $1,400.

  • 2015 - The U.S. defense budget was $637 billion. The average platinum trading price was about $1,100.

  • 2016 - The U.S. defense budget was $537 billion. The average platinum trading price was about $1,100.

  • 2017 - The U.S. defense budget was $583 billion. The average platinum trading price was about $1,130.

  •  2018 - The U.S. defense budget was $603 billion. Platinum is currently trading at about $800.

  • 2019 - The U.S. defense budget is projected at $716 billion (awaiting approval by congress).

So to look at only the biggest trends those statistics show, the U.S. defense budget has held pretty much steady over the last eight years. During the same period, platinum prices have wavered up or down due to other factors, not military spending, in a way that is pretty much unrelated to the size of the defense budget. Yet overall, the trading prices of platinum are now low when compared to average trading prices since 2010. And that spells opportunity.

What Does that Mean for Platinum Investing?

Let’s focus on two factors:

  1. The defense budget is projected to increase, which should result in increased production of armaments and increasing (or at least steady) demand for platinum. 

  2. The current trading price of platinum is low and seems poised to rise.

In our view, those two trends indicate that now is a great time to invest in platinum, and in platinum scrap especially. If you have platinum scrap that you would like to have test and recycle profitably, call our precious metals investment advisors today at 800-426-2344.

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