When diversifying investment portfolios with precious metals, there are more options than just gold and silver. Platinum is a highly valuable precious metal that provides investment opportunities for new and seasoned investors.
Platinum shares several characteristics with gold and silver. As an investment, its value, scarcity, and industrial applications offer unique opportunities to grow your wealth and protect your financial future.
Understand why this precious metal is an excellent investment commodity and discover why you should consider adding platinum to your portfolio.
What is Platinum?
Platinum (Pt) is a precious metal with a silvery-white appearance. It is a rare, highly dense, corrosion-resistant, and malleable metal, making it extremely versatile. Unlike many other metals, such as silver, platinum does not oxidize, so it retains its luster over time.
Platinum Supply
Approximately 72% of the world’s platinum comes from mining. Most platinum mines are in South Africa, followed by Russia, Canada, the United States, and Zimbabwe. Mined platinum comes from platinum group metal (PGM) ores such as sperrylite, cooperite, or braggite.
Aside from mining, the recycling industry is the world’s second-largest producer of platinum, responsible for approximately 25% of the global supply. About 80% of recycled platinum comes from recycled automotive catalysts. The remainder is recycled jewelry, electronic waste, and other industrial waste.
Platinum Demand
The four primary sectors driving global platinum demand are the automotive industry, the jewelry industry, the non-automotive industrial sector, and the investment sector.
- Automotive industry: The primary industrial use for platinum is the production of diesel vehicle catalytic converters. Other uses include producing numerous other automotive components, such as high-performance spark plugs, oxygen sensors, hydrogen fuel cells, and ABS components.
- Jewelry industry: Although slightly less common than silver and gold, high-purity platinum is frequently used to make jewelry like rings, necklaces, earrings, and pendants.
- Other industrial uses: Other industrial sectors need platinum to produce electronic components such as hard drives and thermocouple wires. It is also necessary to produce chemicals like nitric acid or benzene, refine petroleum, and manufacture glass, pacemakers, and surgical tools.
- Investment sector: Platinum is commonly traded as an investment commodity. Popular investment decisions include tangible assets such as bullion bars and coins.
Why Invest in Platinum?
Like other precious metals, investing in platinum can be a great way to safeguard your wealth. Here are some of the top reasons why platinum is a solid investment:
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Rare and Valuable
Platinum is about 30 times rarer than gold, naturally limiting the global supply of platinum and making it more valuable and challenging to find. It also has a high melting point and more complex extraction and refinement requirements than gold and silver. These factors contribute to its high economic value, comparable to gold.
Due to industrial demand, the spot value of platinum has historically been more volatile than safe haven precious metals like gold and silver. Depending on the current global economic conditions and fluctuation periods, platinum may be more or less valuable than gold.
For instance, on October 16, 2023, the spot value of gold was $1,919.44 per troy ounce, whereas the spot value of platinum on the same date was $890.75. Despite its comparative value, platinum has historically remained a high-value precious metal, making it a good hedge against inflation.
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Portfolio Diversity
Platinum is an excellent addition to your portfolio, allowing you to diversify with a precious metal commodity other than gold or silver. Investing in platinum protects your wealth and secures your financial future by making you more resistant to the market fluctuations of other assets.
For example, if gold, silver, or other assets underperform while the value of platinum rises, the overall impact on your portfolio’s value will be mitigated, preserving your wealth.
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Low Risk
While price volatility can affect platinum, it can be a low-risk investment. Tangible platinum assets like platinum bullion bars let you turn a portion of your wealth into a physical investment. You can hold, store, and control these assets, helping hedge your wealth against inflation. All that’s required is adequate storage and security to keep your platinum safe.
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Market Demand
In May 2023, the global demand for platinum was projected to increase by 28%, whereas the supply will decrease by approximately 1% year-on-year. These trends show demand is rising while supply is slowly falling. It indicates the value of platinum is high and projected to grow even higher in the short-term and long-term.
Investing in platinum at the right time can protect your existing wealth, help you grow your investments, and secure a financial future through high returns when you decide to sell or trade.
Popular Platinum Bullion Investments
If you want to invest in tangible platinum assets, two of the best solutions are government-minted platinum coins and investment-grade platinum bullion bars. Some examples of popular platinum bullion investments to consider:
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American Platinum Eagle
The American Platinum Eagle is the official platinum coin of the United States Mint. It is the most popular physical platinum coin in the United States.
All American Platinum Eagles are made using .9995 platinum, meaning they contain 99.95% pure platinum. The coins are available in four variants: the 1-troy ounce $100 coin, the $50 coin weighing 0.5 troy ounces, the 0.25-troy ounce $25 coin, and the $10 coin, which weighs 0.10 troy ounces.
While these coins have face values and are legal tender in America, their actual value corresponds to the platinum’s quantity and current spot value.
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Canadian Platinum Maple Leaf
The Canadian Platinum Maple Leaf is Canada’s official platinum bullion coin, produced by the Royal Canadian Mint. It is Canada’s equivalent to the American Platinum Eagle and is made of .9995 pure platinum.
As with the American Platinum Eagle, the Canadian Platinum Maple Leaf comes in multiple sizes and denominations in Canadian dollars: a $50 coin weighing 1 troy ounce, a 0.5-troy ounce $25 coin, a 0.25-troy ounce $10 coin, and a $5 coin that weighs 0.10 troy ounces.
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Platinum Bars
A common alternative to investment coins is bullion bars. Unlike coins produced by government mints, platinum bars are typically manufactured by private companies such as PAMP, Valcambi, or Johnson Matthey.
The most common purity rating for investment-grade platinum bars is .9995. Depending on the manufacturer, the denomination stamped on the bar may be either .9995 or 999.5.
Platinum’s Historical Investment Performance
While platinum has been around for hundreds of years, platinum futures were offered for the first time in 1956 on the New York Mercantile Exchange. This made platinum, in all forms, a popular investment commodity from 1975 until its first price spike in 1980, when it rose from $219.70 per troy ounce in January 1979 to $920.10 in February 1980.
Significant periods of volatility after the 1980s include:
- Mid-to-late 1980s: The price of platinum began spiking in 1986, exceeding $600 per troy ounce multiple times throughout the late 1980s until gradually declining in 1990. This period corresponds to increased demand from the automotive industry, which used the metal to produce more efficient catalytic converters in response to increased emissions regulations in the United States and Europe.
- 2008 financial crisis: The platinum market surged after the 2008 subprime mortgage crisis. Platinum peaked in February 2008, exceeding $2,000 per troy ounce. This was caused in part due to production issues in South African mines, where most platinum in the world is mined.
In October of the same year, platinum crashed to $813. Global financial factors reduced industrial demand and caused a mass sell-off of numerous assets, including platinum. - Current volatility: The price of platinum has been subjected to regular periods of volatility in the past few years, with a recent price low of $611 per troy ounce on March 16, 2020, and recent highs of $1,274.06 on February 15, 2021, and $1,124.28 on April 17, 2023.
These have been caused by various global economic and industrial factors, such as increased demand for platinum products to produce electric vehicles and continued mining infrastructure disruptions in South Africa.
Tips for Buying Platinum Bullion
Are you looking to buy physical platinum assets as an investment? Follow these tips to protect your wealth and diversify your portfolio.
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Proper Sourcing
Whether you want to purchase coins, bars, or jewelry, ensure your platinum comes from a reputable source. Buying from private individuals or pawn shops comes with the risk of fake products or scams. Instead, visit a local, trusted bullion dealer at AU Precious Metals.
Buying platinum from us guarantees the quality and authenticity of your investment, giving you the peace of mind of knowing you purchased real, investment-grade platinum bullion.
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Safe Storage
Once you have purchased physical platinum assets, you must use an appropriate storage solution to secure them. At AU Precious Metals, we recommend keeping your platinum stored in a high-quality home safe. While home storage solutions can be costly upfront, they let you retain control and immediate access to your platinum assets.
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Liquidity
An asset’s liquidity refers to how easy it is to sell. The more liquid an asset is, the easier it is to turn into cash if the time to sell your investment is right. Less liquid assets are harder to convert to cash but can store your wealth in the long term more efficiently.
Consider the liquidity of your platinum assets according to your financial goals and investment timeline.
Coins produced by government mints, such as the American Platinum Eagle, are among the most liquid platinum assets, best suited for short- and medium-term investments. They are highly recognizable, accepted by reputable precious metals dealers, and have relatively low premiums, meaning you can sell them for the approximate spot value.
Larger and heavier assets, such as platinum bars, are primarily intended to be long-term stores of value and hedges against inflation. The liquidity of these assets depends on their size (the heavier, the less liquid) and the manufacturer’s reputation.
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Personalized Guidance
When buying platinum assets for investment, AU Precious Metals can guide you and provide personalized advice to help you make the best investment decisions.
Our staff has real-time information on platinum supply and demand, market conditions, and forecasts, helping them advise you on when and what to buy. As precious metal dealers, we also have extensive knowledge of all types of platinum products, allowing us to guide you on which assets to buy, how to store them, and how to ensure their authenticity.
Should you need to liquidate or capitalize on your investments, we can advise you of the best time to sell. We can provide quotes, verify your assets’ authenticity, and buy your platinum assets quickly, ensuring a fast and smooth process.
Start Your Platinum Investment Journey with AU Precious Metals
Learn why platinum is a good investment for your portfolio at AU Precious Metals. Our helpful and knowledgeable staff will help you with all your platinum investment needs, from advice to choosing the right platinum assets to purchase.
To diversify your portfolio, we can also help you buy and sell other precious metals, including gold, silver, palladium, and rhodium. Contact us or visit our location in Rochester Michigan, today to start investing.
