platinum ingots in the stack
Discussion of precious metals often revolves around gold and silver. Failing to consider other options, though, can cause someone to miss out on significant investments. While investing in platinum may not get as much attention as other metals, it’s certainly something you should look into.
Of course, smart investors learn as much as they can before committing money to anything. It’s one thing to say that platinum can lead to big returns on investment, but it’s quite another to understand why this might actually happen. The following guide will help you in this endeavor.
Once you’ve completed this resource, you’ll have a better grasp on the risks and benefits of investing in platinum. And while there’s no way to predict perfectly how this precious metal will perform, you’ll be in a better place to make a more informed decision.
Platinum is a unique metal and the most traded precious metal behind gold and silver. It has several uses in a variety of industries. And while its price per ounce has fluctuated significantly since the turn of the new millennium, its value nearly doubled between April 2020 and May 2021.
Like gold and silver, experts consider platinum a precious metal due to its rarity. In fact, current models say that the world could run out by 2030. If this occurs, then buying platinum will no doubt have been a genius investment. This is especially true if demand remains high.
What drives this demand, though? The fact that there are several sectors that use platinum. The following are the most common:
Anyone investing in platinum should become well-acquainted with the automotive industry. Many people who buy palladium bullion do so because of the metal’s use in catalytic converters. The same is also true for platinum. In fact, nearly one-third of the metal that gets mined goes into automobiles.
Palladium is the metal of choice for catalytic converters, but platinum is a popular alternative. The metal has also been popular in jewelry for thousands of years. It has hypoallergenic properties and is tarnish resistant, so it’s no surprise it’s gone into items such as the Hope Diamond.
When you’re considering a platinum investment, it’s also important to distinguish between the metal and other platinum group metals. The entire group includes:
While each of these are in the platinum group, those investing in platinum only focus on a single metal. This doesn’t mean that other elements within the group don’t hold value. Palladium surpassed the value of gold in 2019, and rhodium trades for tens of thousands of dollars per ounce.
When investing in platinum, though, it’s important to not confuse different metals. The precious metal and the group it’s in are not synonymous. And while other elements within the group may hold more value, platinum might be the best investment of all.
If you’re stuck deciding between buying a platinum bullion bar and any other type of precious metal, you might wonder what’s the advantage offered by this white metal? Fortunately for investors, there are many. Any of these would justify platinum investing, so their combined effect is extremely impressive.
When investors purchase silver, they often have high hopes that its price will someday surpass gold. While the likelihood of this occurring is negligible, there’s nothing wrong with dreaming. When investing in platinum, though, we already know this can take place.
From April 1997 to July 2011, the price of platinum was higher than gold more often than not. In fact, more than a decade passed before gold even came close to surpassing the metal. Gold may have held more value in recent years, but there’s no guarantee this will continue.
If you run into someone who says that investing in platinum should be your only strategy, it’s best to seek advice elsewhere. While this precious metal may certainly be a great investment, it’s also important that you diversify your holdings.
This means that — if you’re interested in precious metals — consider buying gold bars or other bullion types as well. If you avoid putting all your eggs in one basket, you’ll better protect yourself from price fluctuations.
We often look at precious metals — including platinum — as hedges against inflation. This typically means they’ll increase in price as the value of the dollar declines. This has certainly been the case for gold various times throughout history. Fortunately, platinum does much more.
While gold is certainly a great store of value, platinum also serves as an industrial metal. This means it can perform well during thriving economies. That’s because industrial production goes up during this time, and increased production typically means increased platinum demand.
Imagine yourself carrying the same American dollar into Canada, Australia, Britain and Germany. Every time you step into a new country, the purchasing power of that dollar changes. This is because currency doesn’t have a universal value.
Fortunately, this isn’t the case for platinum. Like other precious metals, platinum holds the same value no matter where you are on earth. And since these items also hold intrinsic worth, investing in platinum coins can prove profitable even if inflation devalues the coin’s purchasing power.
Most of the world’s platinum comes from South Africa, but this isn’t the only place where an investment in the metal can come from. In fact, there are several options to invest in platinum digitally. Thanks to exchange-traded funds (ETFs), you never need to take physical ownership of the metal.
ETFs are funds that track the price of sectors and commodities. When investing in platinum, you can mostly expect a fund’s assets to include physical bullion and mining stocks. While investing in platinum ETFs offers several benefits, there are also serious disadvantages of doing so. Most importantly, there’s no guarantee that these funds will track the price of the underlying commodity. Issues unrelated to precious metals — such as portfolio management — can affect the price.
An even bigger ETF concern for many precious metal investors is that you don’t actually own platinum. If something happens and you could benefit from physical metals, you don’t have the option to do so. Your investment is in the fund itself — not tangible platinum bullion.
Because of these reasons, many experts recommend investing in physical platinum rather than ETFs.
If you look at precious metal price charts, platinum investing seems like a solid choice. Unfortunately, past performance is no guarantee of future success. If you consider major factors that affect supply and demand, though, this precious metal seems like it might be on the rise.
The big driver of this potential price increase — other than possible mine depletion — is automotive industry use. The catalytic converters that use platinum help prevent toxins from entering the atmosphere. As environmental regulations increase, they will become more important.
And while palladium is the primary metal used for these automotive parts, those investing in platinum might have something to look forward to. Palladium prices have gone through the roof recently. If this new norm continues, auto manufacturers may have no choice but to switch to platinum.
If that happens, you can expect increasing value thanks to heightened demand.
You’ll definitely hear more chatter about gold and silver when discussion of precious metal investments occurs. Of course, this doesn’t mean investing in other metals isn’t wise. In fact, it doesn’t even mean that buying gold and silver are the best investment strategies.
History has shown us that platinum has the capability of outshining even gold. While prices can certainly fluctuate over time, this naturally occurring white metal has proven its worth throughout history. From the Ancient Egyptians to modern auto makers, the recognition of value remained constant.
If you’re ready to start investing in platinum, now is the time to do so. Prices can fluctuate depending on many variables, but far too many people have regretted not buying this precious metal before its value spiked. Visit our Platinum Bullion Page today to see the wide variety offered at Silver Gold Bull.
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