Is Platinum a Good Investment?
Believe it or not, platinum has not always been considered a popular way to invest in precious metals. Until the late 1700s, it wasn’t even possible for platinum to be refined, making it impossible for collectors to gain access to beautiful platinum jewelry, bullion bars, or coins. But with the advent of modern technology, platinum has found a place in both the bullion and industrial industries.
Because of the multiple use-cases offered by platinum, there’s no need to wonder why the precious metal has become so popular among investors. Platinum coins and bars are used to stack platinum, and collectors frequently view platinum as a way to diversify their portfolios with a usable and intrinsically valuable commodity.
Is platinum a good investment for your portfolio? Today, the Bullion Academy is going to walk you through everything you need to know about investing in platinum. We’ll explain the benefits, downsides, and basic considerations behind buying and selling platinum bullion products.
Advantages of Platinum as an Investment
Is platinum a good investment? To answer today’s main question, we’ll start by taking a look at some of the main benefits associated with the precious metal. Like many frequent platinum buyers, we’re impressed by the combination of benefits provided by brilliantly white platinum bullion. We’ll cover five main benefits of investing in platinum below: industrial demand, limited supply, hedge against inflation, diversification benefits, and jewelry market influence.
Industrial demand for platinum is exceptionally high. Most precious metals offer industrial use-cases, which is one reason why gold and silver find places in most developed investment portfolios. But platinum is unique because of its high variety of different industrial applications. Platinum bullion is used in fertilizer, plastic, various acids, explosives, and even iPhones!
Is platinum a good investment because of its industrial demand? Industrial demand alone doesn’t make platinum a core investment vehicle, but this aspect of the asset certainly helps cement its status as a premier way to expand your portfolio. Even when the intrinsic value of platinum or demand for platinum bullion products like American Platinum Eagles wanes, industrial need for platinum remains high and keeps prices similarly elevated.
It’s no secret that platinum is rare. But is platinum a good investment because of its limited supply? All precious metals have limited supplies, at least for now. But platinum is far rarer than other precious metals, including gold. Yes, you read this right – platinum is rarer than gold! The extremely limited supply of platinum helps to give it intrinsic value. Combine platinum’s rarity with its industrial use-cases and you’ll get a compelling reason why platinum is the bread and butter of many investment portfolios.
Hedge Against Inflation
Serving as a hedge against inflation is not a unique benefit of platinum. All precious metals help collectors hedge against inflation. As a non-correlated asset, platinum retains value, even as fiat currencies like the United States Dollar lose buying power. This protection against inflation can be very good for your investment stock, and holding non-correlated assets is an important strategy for diversifying your portfolio.
Is platinum a good investment to hedge against inflation? Absolutely. Along with other precious metals like gold and silver, platinum is useful for investors who are looking for a way to fight against the ravages of currency inflation.
Is platinum a good investment for diversification? This is another benefit to buying platinum that we could also apply to gold and silver. If your portfolio is filled with assets correlated to the stock market or the global economy, precious metals like platinum can be a fantastic way to diversify. In the case of financial collapse or rampant inflation, holding platinum coins or bars means that the value of your investment remains relatively safe.
In fact, platinum tends to perform well during insecure economic conditions. When the global economy struggles or public trust in the USD declines, platinum usually experiences a bull market. Adding this kind of diversity to your portfolio is one reason why financial experts generally answer affirmatively when asked, “is platinum a good investment?”
Jewelry Market Influence
Platinum jewelry is a relatively new phenomenon. Just two decades ago, silver and gold dominated the jewelry market. But platinum’s rise as a prime material for high quality jewelry has been swift and significant. Especially in China, platinum jewelry is extremely popular among collectors and retail buyers. Is platinum a good investment if it’s just in jewelry? Platinum’s place in the jewelry market improves the versatility of platinum as an investment tool.
Risks and Challenges
Despite our belief in the value of platinum as a solid investment, there are five main risks associated with investing in platinum bullion. Is platinum a good investment, or do the risks outweigh the advantages? We’ll leave it up to you. Below, you’ll find the five main challenges of platinum investment: price volatility, economic factors, substitution threats, environmental concerns, and market liquidity problems.
Volatility in Prices
Like most precious metals, platinum is a volatile market. This means that the spot price of platinum can jump up or down with little warning. Is platinum a good investment, despite its volatility? This depends entirely on your risk tolerance levels. Investors who are able to weather the storms of volatility that come from the platinum market should consider buying platinum products.
Economic and Geopolitical Factors
A number of economic and geopolitical factors can influence the value of platinum bullion. As we mentioned earlier, platinum performs well during times of economic insecurity. But the opposite is also true. When the strength of the United States Dollar – or consumer confidence in the global economy – increases – it’s likely that platinum will become less valuable. Is platinum a good investment in economically sound periods? It can be! Remember, platinum does hold intrinsic value. But smart investors should understand how geopolitics and economics can influence the value of their assets.
Platinum is sometimes replaced with palladium, or white gold. Palladium is a newer precious metal, and its rise in value has been negatively correlated with platinum’s price. In other words, palladium seems to be gaining value at the cost of platinum. Platinum remains a valuable asset, however, and the wide range of coins and bars made with platinum will likely remain popular for centuries to come.
Is platinum a good investment compared to other precious metals? While the risk of substitution of palladium for platinum is high in some industries, platinum is still a core ingredient in many of the world’s most popular industrial products.
Environmental concerns about the use of platinum can also impact the price of this precious metal. One notable example of this phenomenon happened in the 1990s, when palladium replaced platinum as the main precious metal used in catalytic converters. This trend seems to persist. It’s extremely difficult to mine and refine platinum, and the process has garnered criticism from environmental advocates.
Is platinum a good investment, despite environmental concerns? For now, it seems that platinum still occupies an important place in several key global industries. If this changes and platinum is replaced with palladium in other industrial applications, the price of platinum might decline significantly.
Platinum coins and bars tend to be highly liquid. This means you should never have trouble finding a buyer for your platinum product once it’s finally time to sell the investment(s). But market liquidity can always shift, and demand for platinum can sometimes decline sharply. When a new substitution happens that replaces platinum with palladium, for example, platinum might become less valuable. Is platinum a good investment for high liquidity? Gold and silver tend to be more liquid than platinum, but finding someone to buy your high quality platinum Australian kangaroo should never be very difficult.
Factors Affecting Platinum Prices
Four main factors influence the price of platinum: global economic conditions, industrial applications, investment demand and speculation, and supply from mining and recycling. Is platinum a good investment? Understanding how the following factors cause platinum’s price to change can help you make a better investment call for your own portfolio.
Global Economic Conditions
Global economic conditions underscore price movements for most of the precious metal industry. When the global economy is secure, investors tend to prefer investing in interest-bearing assets. But during times of crisis, war, or insecurity, metals like platinum perform exceptionally well.
Make sure that you research the global economic market before you make up your mind on the question of, “is platinum a good investment?” Investors who understand how platinum fits into the evolving global marketplace are going to be better prepared to make sound investment decisions for a long-term profit.
Like we mentioned in the introduction to today’s guide, industrial applications are one thing that sets platinum apart from other precious metals. Platinum is used in some of the most popular products in the world, and we don’t anticipate that this is going to change in the near future. But always try to watch the news for whispers of platinum being replaced in key manufacturing applications. If palladium replaces platinum as the key precious metal in iPhones, for example, this could be troublesome for the price of platinum over time.
Is platinum a good investment because of its use in industrial commodities? Absolutely. Tracking industrial uses can help you better prepare for the long term future of your platinum investment.
Investment Demand and Speculation
Speculation on the price of platinum can also shift its value. It’s hard to gauge investor sentiment. Sometimes, large institutional investors might sense a coming market shift before average collectors do. When big players in the platinum make moves, you should always be prepared to react quickly. Is platinum a good investment for short-term trading. Generally, we think no. It’s very difficult to predict when platinum prices are going to crash or skyrocket, as the volatility of the platinum market makes it highly unpredictable in the short term.
Supply from Mining and Recycling
The global supply of platinum is very low. This is unlikely to change; large mines of platinum are difficult and expensive to find and extract. Still, the risk of an increased supply of platinum from mining and recycling is something that investors should be aware of. Whenever the supply of platinum increases, prices are likely to go down. Is platinum a good investment because of its rarity? Rarity is most definitely a huge reason behind platinum’s inflated prices, so the discovery of a new platinum mint could wreak havoc on the precious metals industry.
How to Invest in Platinum
Ready to invest in platinum? Hero Bullion is proud to offer a wide range of platinum bullion. Our platinum coins and bars are sold at reasonable prices and carefully examined for quality and authenticity.
Physical Platinum Bullion
Physical platinum bullion is the easiest and most popular way to invest in platinum. When is platinum a good investment? If you can get your hands on quality physical platinum products like coins or bars, you can build your portfolio while having complete control over your investment for its entire lifespan. Physical precious metals are kind in the portfolio diversification world for a reason; these products are entirely free from the threats of inflation, financial collapse, or bank default.
Platinum Exchange-Traded Funds (ETFs)
ETFs are another way to invest in platinum. When you invest in a platinum ETF, you can bet on platinum price trends without having to physically hold the precious metal. Is platinum a good investment in ETF form? Some investment experts prefer platinum ETFs, as they might be easier to hold. With an ETF, you don’t have to worry about storing, protecting, or prepping your platinum products for sale.
Platinum Stocks and Mining Companies
Buying stocks in platinum or mining companies is the last method of investing in platinum we’ll cover. When you invest in a mining company, you’re able to profit from the mining operations of that organization without physically keeping the platinum that they mine. The risk to this method of investment is, of course, that it requires you to have faith in the strength of the company issuing you stock.
Final Thoughts: Is Platinum a Good Investment?
Let’s answer the question once and for all: is platinum a good investment? Platinum’s variety of industrial use-cases, intrinsic value, and history of demand from collectors makes the commodity a prime investment vehicle. You can buy quality platinum bars and coins from hero bullion to diversify your portfolio with one of the world’s most beautiful, rare, and valuable precious metals.
If you still have questions about investing in platinum bullion, please contact our team for personalized assistance.
About The Author
Michael Roets is a writer and journalist for Hero Bullion. His work explores precious metals news, guides, and commentary.