The youngest precious and investment metal, or is platinum worth investing in?
Gold and silver are the most commonly chosen investment metals. The former is often referred to as a safe haven. The value of gold rarely falls, and even if it does, it quickly returns to normal. Silver, on the other hand, is increasingly prosperous, which translates into greater interest among investors. Meanwhile, there is another investment metal that we often forget about when making investment decisions. We are, of course, talking about platinum, which is the youngest precious metal. In today's post, we will focus on what it is and answer the question of whether it is worth investing in it.
Highlights: what is investment platinum and what are its characteristics?
Gold and silver have been in constant circulation since ancient times. Platinum, however, is relatively young. It was only discovered in the first half of the 18th century. Its first deposits were discovered in Colombia, but at the time its value was downplayed. Interestingly, the name ‘platinum’ comes from the Spanish word ‘platina’ (meaning ‘silver’), which was a pejorative term for the metal. At the time, Colombian prospectors believed that the grains they were finding were worthless stones imitating silver. In addition, platinum often stuck to gold deposits, and removing it without damaging both metals bordered on the miraculous. Prospectors were therefore reluctant to discard the resulting nuggets, convinced that they were worth nothing. At the time, its uses and true value were unknown. Today, platinum underpins the functioning of many productions, businesses and industries.
Platinum has been identified as a white metal in which the more skilled eye is sure to notice bluish reflections. The element is extremely resistant to all kinds of damage and is also very malleable and ductile. For this reason, platinum is an extremely popular metal among goldsmiths - it can be used to create a variety of shapes. However, the material has great investment potential, making it increasingly popular.
A rare raw material - why the increased interest in platinum?
The above question often arises among many investors - regardless of their seniority in precious metals investing. Platinum has not been in circulation as long as gold or silver. Many people interested in investing approach it with caution. Other precious metals are tempting with a safe profit because the falls are small or temporary, which means less risk. However, one only has to look at the statistics to see an increasing interest in investing in platinum. There are several factors responsible for the increase in investment demand.
The interest in this precious metal is primarily due to its poor availability. Unlike gold and silver, whose deposits are spread all over the Earth's surface, platinum is mined in only a few countries. Its trace amounts are found in Canada, the United States, Ethiopia and Zimbabwe, among others. The largest monopoly of platinum supply to world markets, however, belongs to South Africa. Where deposits of a particular precious metal belong to one country, the price depends on the prevailing economic situation in that country. Unfortunately, South Africa has been facing major political problems for many years, which also include budgetary issues. At the beginning of 2023, the country's inflation rate was only 4% - however, this is due to the fact that as many as 34% of able-bodied citizens had no employment. Unstable electricity supplies, the cost of mining and platinum production, blatant economic polarisation, frequent racial riots and a huge public finance sector deficit make economic development in South Africa very slow. This in turn translates into a fluctuating platinum exchange rate, as well as its occasional availability. This is where the so-called ‘rule of unavailability’ comes into play, which works particularly strongly for investors and collectors. Investing in platinum becomes something exciting, new and interesting for collectors - so they seize the opportunity when the metal is available at an attractive rate.
The price of platinum is rising - what is it due to?
Another aspect of platinum's growing popularity is its use in many essential industries. This includes the automotive business. More than 40 per cent of all platinum purchased is used to manufacture catalytic converters for diesel cars. This is due to the fact that the metal accelerates oxidation processes. Also contributing to the increase in demand for platinum is the development of green technologies, which are becoming increasingly popular with consumers. The medical industry should not be forgotten either. Platinum is not prone to corrosion and is the least reactive precious metal, making it suitable for use in prosthetics. It is used to produce dental fillings, prosthetic limbs and pacemakers, among other products. The increasingly buoyant growth of the environmental industry and medical advances mean that the demand for platinum is gradually increasing.
It is also worth bearing in mind that certain industries regularly buy platinum, as it is essential for the production of their core range. We are talking here above all about jewellery. Platinum - like gold - is very popular among lovers of fine jewellery. Unlike gold and silver, it does not develop a patina even many years after purchase. The electronics industry is also increasing demand for platinum. This raw material is used, among other things, in the manufacture of optical fibres and LCD displays. As you can see, platinum is used in a variety of industries - both emerging and firmly entrenched in global industry.
Coin or bar - or how to invest in platinum?
Investing in platinum is no different from investing capital in other metals. As in the case of gold or silver, it is possible to purchase bars and bullion coins. Collectors will be pleased to know that platinum versions of timeless numismatic classics are available on the market. Coins such as the Britannia, the Australian Kangaroo, the Canadian Maple Leaf or the Vienna Philharmonic look just as beautiful and impressive as variants made of gold. However, you only need to take a glance at a few of the offerings to notice a significant difference in price. For example, a one-ounce American Eagle made in gold in January 2023 cost around £9,000. The platinum version is available for as little as around 6500 zł. Its purchase therefore means a saving of more than PLN 2,000, which can be used for other investments. Depositing capital in platinum makes it possible to create an impressive collection of coins that will delight with their brilliance for many years.
It is also worth looking at the various platinum bar offerings. These are available in a variety of weights so that any investor can tailor the purchase to suit their financial capabilities. Buying a bar is often much more cost-effective than a platinum coin. This is due to the lower premium above the metal price. This means that a greater amount of bullion in a product means a lower purchase price. It is also worth planning to buy platinum products at shorter intervals. Rapid fluctuations in the price per ounce are a good opportunity to invest in several coins or bars at once. For platinum, buying and selling should therefore take place within a narrow time frame.
Buying physical platinum - where to buy it and how to store it?
As for where to buy platinum, here too the matter is exactly the same as for other investment metals. Both bars and bullion coins are available from mints and central banks. It is also worth checking out the investment metals showroom offers. Another way to obtain platinum is to purchase a bar or coin from a private individual. However, it should be borne in mind that taking advantage of such offers involves a very high risk. The big advantage of investing in platinum is that, unlike gold, it is very difficult to counterfeit. Its high melting point makes it difficult to ‘stuff’ it with other metals. However, this does not change the fact that potential fraudsters still have a lot of room for manoeuvre, which is motivated by the growing supply - they can accept a prepayment and block the buyer's number, send them a completely different item or show false documentation. Therefore - as with silver or gold - it is advisable to invest in platinum only by purchasing it from an authorised bullion dealer or mint.
Another big plus of investing in platinum coins or bars is that they are very resistant to any kind of damage. In the case of gold and silver, care must be taken not to damage the bullion even when removing it from its protective packaging. Coins are prone to scratches, which can significantly reduce their original value. Meanwhile, platinum only needs to be stored in a safe or an armoured drawer. So there is no need to invest in additional accessories and incur additional high costs.
Young precious metals, or is platinum worth investing in?
As always with investing, the answer is: it depends. In times of financial crisis, there is no such thing as a risk-free investment. No matter what you invest in - platinum, gold or silver coins - you should always expect that prices can fall sharply. Indeed, the investment metals exchange can surprise you with a sharp rise in the price of individual bullion. However, the platinum market is certainly worthy of attention. This metal has great investment potential and tempts with its occasional availability, which is why it is very popular with investors who like risk.
It is worth bearing in mind that platinum rates - as with palladium - are volatile and are likely to remain so for many years. Buying this metal in any form may involve waiting a long time for a favourable rate to yield a profit. Investing in platinum, however, can yield impressive returns, comparable to those achieved when investing capital in gold. Just look at the charts of the last two years. In mid-March 2020, the price of platinum - specifically an ounce of platinum - was just under £600. This was due to the fact that, during the COVID-19 pandemic, many industries using the metal halted or reduced operations. After less than a year, however, the price of an ounce of platinum was already approx. PLN 1,200 - an increase of more than 100%. Investing in physical platinum may therefore prove to be an interesting way to diversify an investment portfolio.