The Advantages of Investing in Platinum As Compared to Other Precious Metals

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The precious metals market continues to see an upswing, as investors remain cautious about the state of the stock market and the world’s economies. Despite the fact that the U.S. stock exchanges are operating at record highs right now, many analysts are attributing this to the fact that the Federal Reserve continues to put money into the market.

While some precious metals have seen a bit of a decline in the past couple of years as economies stabilized and investors became more optimistic, there is still a great deal of uncertainty that continues to lead investors to explore precious metals.

While gold may offer the most amount of glitter for investors, there is another precious metal that is frequently overlooked in the world of investments—platinum. Investing in platinum offers the opportunity to take advantage of a unique commodity with a variety of useful applications.

The Basics of Platinum
Platinum is a metal that is a byproduct of the mining of copper and nickel. The richest sources of platinum are found in the mines of South Africa, and it is considered the rarest metal on the planet. In fact, the world’s annual production levels of platinum are well below both gold and silver. Its rarity is one of the driving factors behind the value of investing in platinum.

The Many Uses of Platinum
While platinum may not have the glamorous allure of gold, investing in platinum is a good opportunity that more and more investors are beginning to take advantage of in their portfolios.

As compared to gold or other precious metals, platinum actually has a number of real-world uses and applications that make it more sought after than other types of metals.

While platinum is frequently used in jewelry, similarly to other precious metals, it is also a key component in the automobile industry. Platinum is an incredibly durable and unreactive metal that is corrosion-resistant, and this makes it a favorite of automobile manufacturers for use in catalytic converters. Platinum is also useful in the manufacturing of electronics, as well as for use in dental applications and in thermometers.

Price Drivers in the Platinum Market
There are a number of factors that drive the price of platinum at any given time. As compared to gold, which tends to flourish when the world’s economies are on a downswing, platinum actually tends to be at peak price levels when economies are thriving. The reason for this is because platinum has a number of industrial uses, and typically, when economies are doing well, industry is also doing well.

One of the primary driving factors behind the price of platinum is the strength of the automobile manufacturing industry. When the automobile industry is doing well, typically so is the platinum market. One potential point of concern for anyone investing in platinum is the development of more electrical cars, because these vehicles do not utilize catalytic converters, which may lead to a lowered demand for the metal.

Additionally, many car manufacturers are working on technological developments that would utilize palladium as opposed to platinum. It’s estimated that if developments remain on track, the use of platinum in the automobile industry could be reduced as much as 50%.

How to Invest in Platinum
Investing in platinum can be done in a number of ways, which is the case with all precious metal investment opportunities. One platinum investment strategy is to take advantage of platinum futures, which are traded on the New York Mercantile Exchange.

Other investment options include platinum ETFs, investing in physical platinum and choosing to invest in companies that mine for platinum.

Regardless of the investment method selected, platinum is considered by most economists and analysts to be a valuable asset for investors, with a strong likelihood of a continued upward trajectory.