Background formed by platinum bars. 3D illustration.
Most people investing in platinum in recent years have seen big gains. For instance, an investment in March 2020 had more than doubled by February the next year. While there’s no guarantee this run will keep going, there are various factors pointing towards continued growth.
Of course, it’s simply not enough to look at precious metal price charts to make investment decisions. The value of any bullion type can change at a moment’s notice. This is why it’s so important to be knowledgeable about what you’re investing in before spending any money.
At Silver Gold Bull, we want to ensure all our clients have pertinent information prior to making a purchase. That’s why we’ve compiled this list of interesting facts to know before investing in platinum. Because no matter what you invest in, an informed decision is a wise decision.
Platinum didn’t receive its name until the mid-18th century, but we know people used it before this. That’s because there are descriptions of “little silver” that wouldn’t melt dating back to 1557. Even into the 1700s, they described this precious metal as “unmeltable” in literature.
It wasn’t until 1751 that someone could successfully melt platinum. And until someone invented the oxyhydrogen torch, it was impossible to form the metal into jewelry. This means that when you’re investing in platinum, you know you’re getting a durable investment.
Many people attribute gold’s continued value-storing ability to its rarity. This is certainly a major factor, and it explains why gold is so much more expensive than silver. When you look at the rarity of platinum, though, you see that it’s just as scarce as the popular yellow metal.
While amounts can vary, both these precious metals make up about .005 parts per million (ppm) of the earth’s crust. The most interesting part of this is that — even with similar scarcity — platinum is far less utilized than gold. This is likely due to differing production levels.
When you’re investing in platinum, you’re gaining access to a small pool. During some years, you can expect only 6 million ounces of the metal to come out of the earth. At that same time, over 100 million ounces of gold typically gets produced. For silver, it’s 860 million ounces.
Most platinum group metals (PGMs) do not show up in large amounts in the earth’s crust. In fact, mining of the metal typically only occurs because other materials are being mined. While platinum is popular, it’s usually only a byproduct of mining.
Additionally, most available platinum is not easily accessible. Mining operations have to dig far into the earth’s crust to find the metal. This makes the process far more labor intensive than mining gold, silver and other precious metals. This equates to higher production costs.
Investing in platinum is a simple process, but getting it to your safe or vault? That’s not so simple. So when you buy a platinum coin or shiny bullion bar, keep in mind all the hard work that went into bringing you the item.
If you look at the price of platinum during the 1980s and 1990s, you’ll see how the metal fought it out with gold. During the battle of the most expensive bullion, these two traded the top spot several times. From 1997 to 2011, though, platinum was king of the hill.
In 2021, platinum surged to a six-year high. Even at that point, gold still reigned supreme. But as history has proven, this may not last forever. Various factors made the white metal more valuable than gold for over a decade, and it seems these trends may be on the move again.
When you’re investing in platinum, there’s no guarantee that the metal will overtake its golden counterpart. There’s also no denying that it frequently sees higher returns. When platinum investors look at their holdings from recent years, it’s clear that not all that glitters is gold.
When you buy a platinum coin or bar, you’re not getting stock in the auto industry. Because of the metal’s primary use, though, you might as well be. Around half of all platinum mined in the world goes directly to the automotive industry through catalytic converters.
While the name of this car part may not ring a bell, there’s a good chance your vehicle has one. The catalytic converter reduces harmful emissions entering the atmosphere. With an increased focus on environmental awareness, the demand for these parts has gone through the roof.
The primary metal currently used in catalytic converters is palladium. With prices of this material reaching historic heights, however, it may be necessary for auto manufacturers to switch over to platinum. If this happens, those investing in platinum could see quick and extreme profits.
The only issue with platinum in catalytic converters is cost. This precious metal was once the primary material in the auto part, but high costs forced a shift over to palladium. Now that the comparative prices have shifted, though, a change may be on the horizon.
Of course, this change won’t happen overnight. While you might think automakers could just “switch back” to platinum, it’s not quite that easy. Vehicle manufacturing has gone through major changes in recent years. This means new production methods would be necessary.
Fortunately for people currently investing in platinum, a time-consuming process doesn’t equate to an impossible process. Experts expect palladium to continue rising, and at some point, using the metal will become too expensive for auto manufacturers.
If and when this happens, platinum is in an amazing position to see substantial gains.
When you’re buying platinum bullion bars, there’s a good chance they’re coming from South Africa. That’s because the country produces around 80% of the metal’s global supply. No other country comes close. Russia holds the second position at just 10% of world supply.
This major discrepancy means a few things. When investing in platinum, the top concern is production interruption. Any issue that affects the country’s mines — such as the rolling blackouts frequently experienced — can impede the global supply.
When this happens, the price of the metal could jump suddenly. In most cases, this increase will be temporary. But for those who own platinum when this occurs, there’s a quick opportunity for substantial profits.
Prior to World War II, platinum was the most popular metal for jewelry making. If you bought a gorgeous necklace, an engagement ring or any other high-end piece, it was likely made of platinum. This all changed when the war broke out.
As it turns out, platinum is a very useful metal in combat. That’s why the U.S. banned all non-military use of the precious metal during WWII. While this ban has long since subsided, it’s evidence that investing in platinum is a dynamic decision. At a moment’s notice, demand for the metal could skyrocket.
If you thought mining platinum was difficult, take a moment to consider the extraction process. It involves crushing ore, immersing it in special water, pumping air into floating “ore slush,” skimming off froth, drying it into powder and several other labor-intensive steps.
A single troy ounce of platinum could require up to 12 tons of ore to produce. It can also take up to six months to complete the process. This makes it easy to understand why buying platinum is so much more expensive than investing in silver. Of course, it’s worth it.
While the majority of mined platinum goes into automobiles, a substantial amount also gets used for medical purposes. Consider just a few of the healthcare items that contain platinum as a vital component:
In addition to lifesaving medical devices, several cancer-treating medications also contain the metal. So when you’re investing in platinum, you’re holding a big stake in the healthcare industry.
Each of these facts prove that platinum is more than just a pretty metal. While it might look great as an engagement ring, it also does wonders in keeping vehicles environmentally friendly. Many people might prefer investing in gold, but they rarely realize just how vital platinum is.
The biggest benefit of investing in platinum rather than gold, though, is that you can do so cheaply. While the white metal may have once held more value than its golden counterpart, this hasn’t been the case recently. But considering current trends, this could quickly change.
At Silver Gold Bull, we offer a wide variety of platinum items for investment. When you’re ready to see a profit from this beautiful precious metal, check out our Platinum Bullion Products page!
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