February 6, 2013 – As platinum mines close and automobile sales rise dramatically, supplies of the precious metal have fallen to a 13-year low, according to Bloomberg News.

Investors are currently buying platinum at the fastest pace in three years, it reported.

Barclays raised its 2013 platinum shortage estimate by a multiple of six after Anglo American Platinum (AMS) announced in January that it is stopping production on a number of its South African shafts. Barclays predicted platinum production will drop by 2.7 percent to 5.68 million ounces, the lowest volume produced since 2000.

Anglo American is not the only company that has recently shuttered, idled or closes some its platinum mines. Others in India and South Africa have preceeded it. Increasing environmental costs and compensation demands from foreign governments have caused the costs of production to rise dramatically. Even with rising prices at the same time, the costs of production may not justify reopening the stalled shafts.

“Supplies are very tight and it’s a serious situation,” said Mihir Worah, a fund manager with Pacific Investment Management Company. “Not only are there issues on the supply side, we could see surprises on the demand side as well.”

The news about the reduced supply comes as automakers, consumers of more of the precious metal than any other industry, project a half percent increase in their platinum demand. Along with palladium and rhodium, platinum is a key component for the manufacturing of catalytic converters, which turn automobile emissions into less harmful substances. Bloomberg reported that 53 percent of all metal mined ends up in catalytic converters.

In 2012, car sales exceeded 81 million globally for the first time ever and will grow about 2.5 percent to 83 million in 2013, according to  LMC Automotive Ltd., a research company in the United Kingdom.

In 2013, platinum has already risen to $1,700.50 an ounce in London, surpassing gold’s spot price per ounce for the first time since April 2012. This is not the first time however. Platinum traded above gold from December 2008 through August 2011.

Platinum still has quite a ways to go before it reaches its record peak price of $2,300, which was set in March 2008.

Prices already rose about 10 percent this year, following the same advance for all of 2012, and will average $1,770 an ounce in the fourth quarter, the highest since 2011, according to the median of 15 analyst estimates compiled by Bloomberg.

“Platinum will be a winner especially because the fundamentals are so supportive,” said James Paulsen, chief investment strategist at Wells Capital Management in Minneapolis, Minnesota. “The economy is going to be OK. I would think demand for platinum will be on the rise.”