Investing in platinum has become more and more popular lately as the rare precious metal finds more and more use cases in industry.
In this article, you’ll learn all the ins and outs of investing in platinum.
Live Palladium Price Vs Gold, Silver, and Palladium
What Is Platinum? An Overview
Platinum is a beautiful, rare, and durable metal that has been used for centuries to create stunning jewelry and artwork.
In more recent years, platinum has also become an important industrial metal, thanks to its unique properties.
For example, platinum is highly resistant to corrosion and is often used in catalytic converters. It is also extremely heat resistant, making it an ideal metal for use in high-temperature applications.
Platinum is also non-toxic, which makes it ideal for use in medical implants and other products that come into contact with the human body.
Due to its rarity, according to the World Platinum Investment Council, platinum is also one of the most valuable metals on Earth.
In fact, platinum coins are among the most valuable coins in the world. While platinum is not as abundant as gold or silver, its unique properties make it a precious metal that is sure to continue to be prized by people all over the world for generations to come.
How To Invest In Platinum?
Due to its rarity and numerous industrial applications, platinum is an attractive investment for many people. However, investing in platinum can be a complex process. Here are a few things to keep in mind if you're thinking about investing in platinum:
1. Get Financial or Investment Advice
As with any investment, it's important to do your research and seek out professional advice before buying platinum.
2. Consider Bullion Over Paper Platinum
Being a tangible asset, it only makes sense to buy the real thing as opposed to derivatives. The latter might be more convenient, but there is no replacement for platinum bullion to those looking for real value.
3. Be Aware of the Risks
Like any investment, there are risks involved in buying platinum. The price of the metal can go up or down, and you may not get back the full amount you invested. Before buying platinum, make sure you understand these.
5 Ways To Invest In Platinum
There are quite a few ways to invest in platinum, including:
- Bullion Coins
- Platinum ETFs
- Platinum Retirement Accounts (Gold IRAs)
- Platinum Futures Contracts
- Mining Company Stocks
Check out our top gold and precious metals IRA picks here.
Is Investing In Platinum Better Than Gold?
When it comes to investing in precious metals, there are a few options to choose from. Gold is usually the top choice for investors, followed by silver, but between gold and platinum, which is the better investment?
To start with, let's look at the automotive industry. Platinum is used in catalytic converters, and as demand for these increases, so does the price of platinum.
In contrast, gold is not used in catalytic converters, so its price is not as closely tied to automotive industry trends. This has its good, but also bad sides, as regulations can have a massive impact on platinum prices up or down.
Another factor to consider is that platinum is much rarer than gold. There are an estimated 8 million ounces of platinum above ground, or 250 tons, compared to more than 200,000 tons of gold.
This makes platinum a more scarce resource, which could drive up its price in the future.
It really depends on your goals and priorities. If you're looking for a metal with strong ties to industry, then platinum may be a good choice.
However, if you're more interested in a truly uncorrelated rare metal that has a bigger guarantee of appreciating in value over time, then gold may be a better option.
How is Platinum Investment Related to Stock Market Prices?
Precious metals like platinum bullion are often seen as a safe investment during times of economic turmoil.
When stock prices are volatile, investors often turn to precious metals as a way to safeguard their money. This can lead to increased demand for platinum, which can in turn drive up prices.
While the spot price of platinum can fluctuate quite a bit, over the long-term it has generally trended upwards. This makes it an attractive investment for many people, and one that can have a significant impact on the stock market.
All four precious metals are viewed as safe-haven assets, which means they generally have a negative correlation with stock market prices and other risk-on assets.
When platinum prices rise, it can signal that investors are worried about the stock market and are looking for a safe place to invest their money.
This doesn't have to be universally true, as there have been plenty of instances where both the precious metals market and the stock market gained together. However, like with other precious metals, platinum is viewed as a stock market hedge.
More Reasons To Invest In Platinum
Platinum is a precious metal that has many uses. It is abundant enough to be considered a major commodity, but it is also rare enough to be considered a precious metal.
1. Platinum has many use cases
Platinum is most commonly used in jewelry, but it is also used in catalytic converters, electronic devices, and chemical reactions.
Thanks to its strong chemical properties, platinum is used in a wide range of applications, from automotive catalytic converters to jewelry and dental implants. This demand helps to support the price of platinum even during times of economic downturn.
Platinum's price is influenced by a variety of factors. Unlike gold, which is primarily driven by investor demand, platinum prices are also affected by industrial demand and supply levels.
This makes platinum a more volatile investment than gold, but also one with greater potential rewards.
2. Platinum has a lot of upside
Platinum is an excellent long-term investment because it has maintained value over time and is not subject to the same economic fluctuations as other investments. The volatility can be seen as both good and bad, and it's what allows all industrial precious metals to post massive gains while still providing safety.
If you're looking for a safe investment with the potential for excellent returns, you can't go wrong with platinum. Here are some of the key reasons to consider investing in this precious metal:
3. Platinum is rarer than gold.
50 tons compared to gold's 200,000 tons make platinum exceedingly rare and exceptionally vulnerable to supply disruptions.
Why Consider Platinum A Good Long-Term Investment
The platinum market is small, and the platinum price is easily impacted by changes in production. The ETFs and physical platinum prices could always go up in short order if one or more of platinum's mines suffers issues.
World Platinum Investment Council data shows that over 70% of platinum is mined in South Africa, and the rest comes from countries with geopolitical issues as well.
With supply being so limited, platinum is always risking coming under a supply glut. This is one of the main things platinum investors are looking out for, together with changes in automotive regulations.
Final Thoughts - Should you invest in platinum?
Platinum is expected to hit a record deficit this year, and it has been gaining while its sister metal palladium fell. Platinum was worth more than gold for most of its history, and should it merely catch up to gold's current price of $1,950, it would represent a sizeable gain.
Platinum investment is seen as a riskier move compared to gold or even silver, but the safety and long-term value are always present. It's a risk-on investment that only exposes the investor to so much risk.
Next up, read our guide on how to invest in precious metals for the long-term: Precious Metals IRA Guide