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When people talk about investing in precious metals, silver and gold are often the topic of discussion. Of course, you can’t forget about platinum. It has had periods of stellar performance throughout history, and a time may come when platinum is worth more than gold.
While this might seem like an outlandish theory, we’ve actually seen it happen in the past. In fact, it’s not even the distant past. Unfortunately for platinum investors, times have changed. For those with an eye to the future, though, big things could be on the horizon.
Always understand that there are no certainties in precious metals investing. It’s still important, however, that you have the best information when making purchase decisions. Once you know the facts, a future where platinum is worth more than gold won’t sound impossible.
What’s So Special About Platinum?
While people may pay more attention to gold, there are many times when platinum seems to stand out. If you purchase engagement rings, for instance, a platinum band often costs more. Additionally, we consider a platinum music album far more successful than a gold album.
If you decided to buy a platinum bullion coin in recent years, though, you likely noticed its affordability compared to gold. In fact, that’s often a driving factor in why people invest in the metal. What may surprise you is that gold isn’t really more special than platinum.
If we look at precious metals in the earth’s crust, platinum is rarer than gold. And when you consider the latter has far fewer uses, it may be hard to understand the price differential. Just consider the following common uses of platinum:
- A catalyst for chemical production
- Components of computer hard disks and electronics
- Spark plugs, dental fillings, and pacemakers
- Chemotherapy drugs
- Automotive parts
At least half of the metal produced every year goes towards the automotive industry. As we’ll discuss later, this could be what leads to a time when platinum is worth more than gold. Of course, the fact that most gold is used for investment makes the price differential even more confusing.
This all comes down to one word: demand. While platinum may be more scarce and have additional uses, there simply isn’t the same demand for platinum as there is for gold. This doesn’t mean it’s not special; it simply means people would rather have gold. In most cases, this is due to investment preferences.
There’s a fact that many people don’t realize when they invest in precious metals. That fact is, there was already a time when platinum was worth more than gold. Something obviously changed, but it’s that very change that could drive platinum back to the top.
When Was Platinum Worth More Than Gold?
One look at the price of platinum shows how well it’s performed in the past. In fact, between 1997 and 2011, the price of gold could barely keep up. An entire decade passed during which the silvery-white metal cost more per ounce than its golden counterpart.
The big change between then and now is demand. We discussed how platinum’s primary use is in the auto industry, and the demand was massive at that point. The metal is a primary component in catalytic converters — an auto part that keeps harmful fumes out of the air.
Around the time when platinum was worth more than gold, environmentalism was experiencing a resurgence. Governments had legislated environmentally friendly statutes. This drove up demand for catalytic converters. Unfortunately, a few issues emerged with platinum:
- Increased demand led to higher costs for auto manufacturers.
- Higher costs led manufacturers to focus more on palladium.
- Demand for diesel vehicles — which use large amounts of platinum in their catalytic converters — decreased.
- We realized palladium is more efficient in catalytic converters.
All these factors led to a massive reduction in demand for the precious metal. While a long time went by when platinum was worth more than gold, big changes started occurring in 2011. By the time 2020 rolled around, an ounce of platinum was valued at about two-thirds the price of gold.
Of course, this doesn’t mean anyone lost money on platinum. In fact, if you chose to buy a platinum bullion bar for around $600 in March 2020, its value would have climbed to more than $1,300 by February 2021.
Could Platinum Be Worth More Than Gold Again?
When automakers started using more palladium in catalytic converters, it was largely due to platinum’s high price. In recent years, though, the reverse has occurred. The high demand for palladium in catalytic converters caused its price to surpass gold near the end of 2017.
This would make you think that auto manufacturers would simply revert to platinum use. Unfortunately, this is a task that takes time and effort. Experts believed this process would set into motion, however, if palladium became twice as expensive as platinum.
On May 4, 2021, palladium hit a new high of $2,992. On that same day, platinum traded at $1,236. If the experts are right, we can expect automakers to phase platinum back in. And since demand for the metal is already on the rise, it seems big things are coming.
And even before a potential switch back to platinum in catalytic converters, we’ve already experienced platinum deficits. In fact, industry insiders expected 2021 to be the third year during which demand for the metal outpaced supply. There’s no guarantee platinum will be worth more than gold, but the possibility seems more likely.
Is Platinum Worth More Than Gold Now?
It’s possible to argue that platinum is already worth more than gold. This certainly wouldn’t be true based on the raw numbers, but when you look at the return on investment, a different story begins to emerge.
- Industrial demand will increase during economic recoveries.
- Higher demand for environmentally friendly products.
- Gold prices may drop due to economic recovery.
- Demand for platinum as a store of value will continue.
Regardless of the underlying reason, better returns could create a situation where platinum is worth more than gold for investment purposes. And when you consider the silvery-white metal’s demand may skyrocket in coming years, it may be worth more in overall value as well.
Of course, this doesn’t mean you shouldn’t buy gold bullion bars or other precious metals. Even when an ounce of platinum costs more than an ounce of gold, the latter saw consistent growth. Just because one item is more valuable than the other doesn’t mean one is worthless.
As with any type of investment, diversification is key when buying bullion. Having a diversified portfolio can protect your investments against swings in the market. Keep this in mind when choosing which precious metals to invest in.
Start Investing in Platinum Today!
Like gold and silver, platinum is a precious metal that serves as an excellent store of value. It cannot experience devaluation like paper currency, and it holds universal value no matter where you go. These facts alone are enough to convince many people to invest in the metal.
Of course, some won’t invest until they realize that — not too long ago — platinum was worth more than gold. There were significant contributors to this situation, though, and those factors have long since subsided. Fortunately, industry changes may make this a reality again.
At Silver Gold Bull, we want each of our clients to have the information necessary to make smart investments. Even if you don’t envision a future where platinum is worth more than gold, the precious metal still has a ton of potential.
Check out our Platinum Bullion Products page to see all your options for investing in the silvery-white metal.