The Investment Potential for Investing in Platinum

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Talking about precious metals does not always have to mean gold and silver. This is confusing to many people who only ever see these two metals reported in the commodities reports in the news. Even though not as many people are talking about platinum, it is not a good idea to write off investing in platinum. In fact, it is a good idea to think about the many opportunities that are made available through an investment that is in such high demand within the industrial community.

Platinum Characteristics
If you are used to gold as an investment, it is important to keep in mind when you are investing in platinum, it behaves differently than gold. This is because platinum tends to perform better when the economy is performing better. After all, the main use of platinum is in catalytic converters. There is not as much need for building more engines for cars when the population cannot buy new cars.

In addition to its use in industrial applications, platinum is also being used more and more in making jewelry, dentistry and so much more. All of this means that an investment already in high demand will be in even higher demand.

Keep in mind that when the government is in turmoil, gold will perform well. On the other hand, when there is a liberal form of government in office, platinum will perform better. This is because fuel efficiency and lower emissions are platforms for liberal governments.

For the most part, those who invest in precious metals are interested in investing in platinum simply to hedge against their gold investments. Seeing as the two tend to move in opposite directions, when gold is performing poorly, investors can make an even swap of their gold investments.

Methods for Platinum Investing
Now that you know why you want to investing in platinum, you will need to consider how you will make your investment. There is very little platinum bullion and coins in the world, since the metal is so hard to work with. This is why many people looking to make this kind of investment will opt for making their investments online instead.

One of the most popular ways to make a platinum investment is to purchase exchange-traded funds (ETFs). This kind of investment gives you ownership of platinum without having to take physical ownership of the metal. Someone else stores it for you and you can easily trade or sell your ETF if you should ever be so inclined.

Mining Platinum
An important consideration when investing in platinum is that mining the metal is not easy. Mines that are developed to extract platinum are slow to come on line and will take years to get started. Once online, the mine will be slow to produce the platinum that is in demand throughout the world. This is why the prices of platinum remain so high.

The United States is the biggest consumer of platinum. The U.S. is responsible for purchasing more than 94% of the world production of platinum. The majority of the major platinum producing mines are located in South Africa and Russia. This means that a problem in either of these governments can cause a spike in platinum prices.

Even while palladium shares the same chemical and physical properties as platinum, it is not as valuable. Major industrial companies prefer platinum for its use in industrial applications and jewelry making. This is why even though the price of platinum has dropped from $2,252/ounce in March of 2008 to $1,595/ounce the same year, investing in platinum is still a good idea as it will likely recover to an even higher value.