Jewelry question: Was platinum's worth inflated to discourage dishonest white gold?

While fretting over the cost of engagement rings, I was talking to a friend last night, who told me an interesting story I’d never heard before.

She said that once upon a time, gold was where it was at for expensive jewelry-making. Platinum wasn’t a valued metal for jewelry. It was, in fact, a low-cost filler. And some dishonest jewelers would simply white-gold cap their platinum, claiming it was solid gold. In order to assure honesty and quality in jewelry making, the price of platinum was artificially raised higher than gold. From there it was just a snowball effect to the present state of platinum being the most expensive (and therefore highly desired) base for a good ring.

So I look to the knowledge of the dopers to prove or disprove the story. References greatly appreciated.

I know nothing about about the history of precious metals. What I do know is that that story doesn’t, umm, make any sense. How would one go about artificially raising the price of platinum? And who would do this? Some government? The jewelery buying public?

Not sure about that myself. Commodities exchange, perhaps? Government regulatory agency of some sort? It was one of the things over which I was unclear. I guess the same people who can make me feel certain that 18k gold and 24k gold are distinctly different and both representative of their actual compositions.

Platinum is far more rare than gold; it’s gold that has an artificially inflated price, due to its beauty and its occasional use as a store of wealth. Platinum is an extremely cool metal, and more interesting than gold in many ways.

I’m not entirely sure about just what your question is?

I deal in prescious metals(among other things) for a living. Have since 1974.

The current high price of platinum($800US/ounce) is mainly due to speculation in the commodity as an investment. It has nothing to do, nor has it ever had to do, with anyone in the jewelry industry trying to control the price(which they couldn’d do, anyway.)

The price of platinum has more to do with the economy and catalytic converters for automobiles than jewelry fashion.
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Jewelers never “capped” platinum with white gold to try to cut costs.

Ask your friend for some specifics, as to where they heard this story.

Not likely, as platinum is extremely rare compared to gold. If someone wanted to pull a fast one, there are a lot of cheap metals that could be used. Sources estimate that yearly platinum production is about 5% of gold. This is pretty rare stuff.

There was some coinage at one time that was made of platinum and plated with gold, but that wasn’t to save money, it was to add durability to the coins without diminishing the value, from what I understand. That was also hundreds of years ago.

It’s hard to find prices prior to 1960, but even back then, platinum was more expensive than gold. There are a ton of links that show it’s history, just google “History of Platinum” and find one that covers all the bases.

Other than a very brief period following World War II, platinum has been the metal of choice for royalty, movie stars, and famed jewelers, such as Faberge and Cartier. Platinum use in jewelry was actually banned here during the war, so it took a few years to become popular again.

If anything, based on its rarity, platinum is underpriced when compared to gold. Luckily, it’s not as popular with the masses, so the lower demand helps keep it in check.

The price of gold, currently bouncing between 390-410 US/ounce is in no way inflated. Certainly not artificially. Just WHO has the ability to artificially support the price? The price is a direct function of the US vs. other currencies(Euro, SFr, etc). When the dollar gets hammered by foreign currencies, gold goes UP in price(based in US ). It's been that way for at least 5 or more years. Prior to that, the gold price varied inversely with the US/Yen relationship.

Platinum is the artificialy inflated metal at this point. If some of the hedge funds decided that platinum wasn’t a good play, you could see it’s price fall to something more in line with gold’s price.

Cite? :slight_smile: Not true. Didn’t happen.

Not true. If you can’t find cites, then how do you know it was more expensive than gold? IT was LESS expensive than gold for much of its history.

Platinum is currently overpriced. Read my previous post. It currently is MORE popular with the masses. Starting about 2-3 years ago, the powers that be in the fashion jewelry industry starting pushing the platinum/white gold/silver look.

We have customers come in with their 20 year accumulation of yellow gold items, wanting to trade them in on platinum/white gold. 10 years ago, you couldn’t have sold a platinum band to save your life. IT smacked too much of grandma. Today, it all the fashion. 10 years from now, we’ll see the platinum bands coming in as trade against yellow gold. “Everything old is new again.”

The Hunt brothers know: The Hunt Brothers and the Silver Bubble

Of course, today, the Hunt Bros. debacle couldn’t occur, at least not in the same manner. The commodity exchanges instituted new rules about how many contracts an individual can control, to prevent such a thing from repeating.

And you’ll see titanium bands coming in, and try hard to keep the chuckling to yourself. :wink:

Well, it’s arguable as to whether it happened. It was after all 2-5 hundred years ago. I can’t find that exact quote, but I have a ton of links on platinum, so that’s hopefully understandable. I did find other sources which go down the same or similar paths with this history. Various sources disagree as to whether it happend, why it happened, when it happened, etc., but you can take it up with them.

From here: “In fact, since platinum was considered of little value, it was soon being used by forgers to adulterate Spanish gold coins.”

Or here: “European authorities became concerned, however, because platinum is well within 1% of the atomic weight of gold and almost the same density. The metal was banned in some locales because it was feared it would be used as a coin blank to which gold plating would subsequently be added. The gold-coated platinum coins could then be passed into circulation masquerading as solid gold coins.”

Perhaps here: “Between the 1860’s and about 1881, platinum was used, in Spain, to counterfeit gold coins including sovereigns.”

Actually, this probably sums it all up best: “The history of platinum is very imperfectly treated, even in encyclopedias, and many misconceptions are current.”

I have plenty of cites. I said I couldn’t find them prior to 1960 for Platinum. That means that I CAN find them for 1960. 1960 prices for platinum: $80.00 and for gold: $35.27. Perhaps you understood “back then” to mean prior to 1960, when it meant the year 1960. There have been periods when it has been more, been less, been unavailable to the general public, etc. I was saying that even if you go back 50 years, it was already more highly valued than gold.

Your definition of popular must be different than mine. I agree that it’s more popular than it was a few years ago, but that does not make it more popular than gold, unless you live in Japan. Fromhere: “Demand for platinum for the fabrication of jewellery in North America rose by 5% in 2003 as platinum built on its popularity in the bridal sector. Consumer surveys conducted in this target market indicated that in 2002 platinum accounted for 38% of engagement rings priced above US$3 000, 36% of women’s wedding bands priced above US$1 000, and 32% of men’s wedding bands priced above US$500. These are substantially up on previous years, despite the rising platinum price. Recent consumer and trade surveys confirm the increasing preference for platinum bridal jewellery.”

You’ll note that those are good numbers, but not as high as gold, and they are also limited to higher priced jewelry items. What percentage of wedding bands below $1000 do you think are made of platinum?

I’ll completely agree that its popularity has risen drastically, as it has. I even have a platinum wedding band myself, which got me started looking into it in the first place. It’s still not more popular than gold in this country, nor in Europe.

This is an extremely hazy memory, but it may help explain the platinum-used-as-counterfeit-for-gold.

I remember a television show of the (probably) early 1960s or (possibly) late 1950s in which someone acquired a number of old gold coins only to be told that they were fakes, gold-plated over another metal and they had been duped. But (surprise twist ending) the metal the gold had been plated atop turned out to be platinum, which was now worth more than the gold would have been, and thus the swindlers had, unwittingly, given the “victims” a bargain.

i seem to recall that this was from some sort of anthology show, not a show with a regular cast.

Sorry to be so vague, but it’s stuck with me for 40 years or better as a clever twist.

You’re correct about the counterfeits. I just called my buddy in California, who deals in this kind of coinage. He said that not only did it happen in Spain(although that was the most common), it occured in France, etc.

Those poorly executed fakes today sell for about two times the metal price as examples of numismatic trickery.

My original objection was to your saying that they were plated for durability. These fakes occured in the 1850’s-1880’s.

Is it possible that Platinum’s use as a catalyst in emimssion control systems has contributed to its high value in the past 25+ years? Gold has lots of industrial uses but most require an extremly tiny quantity, thin films and plating. Scarcity is only one part of the price equation. Bee farts are in short supply but no one wants them.

That is correct Padeye. Check out the link in DMC’s post which explains the increased demand for platinum. The fact that demand has exceeded mined supply for 5 years running suggests that platinum prices are not artificially high. There are other factors such as small inventory which make the price volatile.

I can’t find that cite anywhere, but I do have the damned thing, and remember reading it. I actually think I’m siding with you, and that the cite was incorrect, as I have found that the history of this metal is pretty iffy in many areas.

It’s my understanding that DeBeers limits the quantity of diamonds being mined in order to artificially increase the price. The production of crude oil is constantly controlled to artificially increase the price.

Why does the fact that demand exceeds mined supply suggest that prices are not artificially high?