Investing in Platinum - Everything You Need to Know
Investing in platinum is similar to storing your wealth in other precious metals like gold and silver.
However, the use of platinum for investment purposes is a recent development. Silver and gold have been traded for thousands of years. Platinum was only discovered in 1735, by comparison.
The scope and scale of the bullion market today is also much larger for gold and silver.
This begs the question: Which is the best metal to invest in?
Comparing Platinum to Other Metals
Copper is sometimes categorized as a semi-precious metal. It has the lowest price of the group due to its widespread supply. Copper bullion has, at times, been hoarded as a store of wealth. Nonetheless, copper is mainly used in industries like electronics and is best classified as a base metal.
Silver is also far cheaper than platinum. It's much more abundant and has more diverse industrial uses. Visually, silver has a very similar hue but is slightly grayer than the bright color of pure platinum. Platinum doesn't tarnish or tone over time like silver, either.
Palladium is one of platinum's "sister metals," as it's also part of the Platinum Group Metals (PGMs). Unlike platinum and silver, palladium has little-to-no jewelry market. The palladium price is also subject to far greater volatility than the other precious metals.
Is Platinum a Better Investment Than Gold?
That naturally leads to a comparison of platinum vs. gold. Why is gold more expensive than platinum?
In terms of chemistry and physics, platinum has several of the same properties as gold. It resists corrosion, has a shiny luster, and can catalyze certain chemical reactions. Platinum's non-corrosion makes it the preferred metal for some wedding-related jewelry (platinum ring).
Check out our podcast for more if you've ever wondered, what is so special about platinum?
Platinum has a much smaller market than gold, though. There's less of it available in the above-ground supply. On top that, platinum futures are less actively traded than gold (or silver, for that matter).
One reason why platinum is cheaper than gold is its primary use in industry. Aside from jewelry and investment, demand for platinum is limited to automobile manufacturers.
Automakers use platinum, palladium, and rhodium in the catalytic converters that reduce car emissions. As a result, the platinum price is sensitive to changes in the auto market.
This helps explain why the platinum-to-gold ratio is rather low compared to its historical average.
The greatest appeal of platinum as an investment is diversification. This is especially true when you already hold some gold and silver in your portfolio.
How Much Is an Ounce of Platinum Worth?
You can always find the updated platinum spot price on our charts page!
Platinum prices are usually measured per troy ounce, like the other precious metals. Our price quotes are listed per gram and per kilo in addition to per troy oz.
Prices have mostly fluctuated between $800/oz and $1,000/oz. At times, the platinum price has broken out of this range. Platinum's resale value also depends on the changing tastes of investors and consumers.
Why Has the Platinum Price Dropped?
Several factors have contributed to platinum's recent slump.
Right now, platinum is in a supply glut. That stockpile is being drawn down, however, amid the supply-chain disruptions caused by the novel coronavirus.
Another headwind for platinum has been developments in the automobile market. Automakers have shifted to using more palladium as fuel emission standards have become increasingly stringent.
Moreover, platinum has suffered from the major downturn in the diesel vehicle market. The fallout from the Volkswagen diesel scandal, for example, has depressed demand for platinum in diesel cars.
Platinum bullion normally comes in the form of bars. There are a handful of platinum coins to choose from, as well. These include the American Platinum Eagle and the Canadian Platinum Maple Leaf.
2012 Platinum Eagle proof coin
You may wonder how to test platinum at home to make sure it's real. The simplest method is the specific gravity test. You can do this test with a scale and a few common household items.
It's also worth noting that pure platinum should not stick to a magnet. This will only occur if it is alloyed with another metal such as nickel.
Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.