How Do Gold Investments Compare to Platinum?
Metal-to-metal platinum is generally considered more premium to gold. The metal’s rarity and density are the primary reasons for its premium status. Since the worth of valuable metals is determined using their weight, platinum jewelry is always pricier than an equivalent piece of gold jewelry.
Despite so many things going for platinum, it doesn’t get the same love gold is bestowed in investing and finance. Even when it comes to industrial applications, gold and silver get the green light first.
In this beginner’s guide, we’ll discuss the reasons for the above or why platinum is not one of the de facto precious metals for investment. For a more comprehensive understanding, we’ll throw light on the following topics:
- A deeper look at platinum
- Reasons it’s not favored by investors
- To choose or not to pick platinum over gold
- Ways to invest in gold or platinum
Since we’ve discussed gold and investing in gold at great lengths before, we shall focus solely on platinum here. We encourage you to read up our detailed write-ups on gold if you’re entirely new to gold investing or to gain a more comprehensive understanding of how the two metals genuinely stack up.
Reading this piece alone shall suffice if you don’t have the time or inclination to read more. The last thing we would want you to be is utterly clueless about the other side—i.e., gold.
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Table of Contents
Platinum: A General Overview
Platinum is part of the palladium, iridium, osmium, ruthenium, and ruthenium class of precious metals, referred to as platinum-group elements (PGE). It’s rarely found on its own. Both platinum and gold are noble metals.
Silvery-White in Color
Platinum looks different from gold; even an almost blind person can easily distinguish between the two. The shiny, silvery-white hue of platinum is not necessarily unique, but it has its legion of followers. The popularity is believed to be the reason behind the creation of white gold, as people couldn’t get enough of platinum.
Unlike white gold, platinum doesn’t shed its signature whitish hue to reveal a yellow tinge. That said, platinum does develop a satiny finish over its surface with time. This change in texture is a desirable trait of the metal.
Rare
Platinum’s global mining output is around 190 metric tons per year. Compared to gold’s annual global production of 2,500 metric tons, platinum ore is rarer. In 2019 alone, approximately 3,500 tons of new gold were produced. Platinum harvest has never been that rich in its history.
Kindly note gold by itself is a rare metal. But there’s no disputing that platinum production numbers make the otherwise rare gold seem more widely available.
Complex to Mine
The world has highly finite resources of platinum. And making it harder to tap into those natural reserves is the difficulty attached to taking the platinum out of the earth’s crust. The metal’s purification process or separating it from the other natural elements it occurs with naturally is pretty challenging.
The complexity attached to mining platinum, coupled with the fact that there are fewer platinum reserves to dig into in the first place, makes platinum extremely rare or less mined.
Relatively Expensive
As mentioned earlier, platinum is usually pricier than gold. But there have been multiple instances when gold has traded for a higher price. Between 1987 and 2008, platinum was more expensive than gold. In 2011, gold outperformed platinum for the first time and had been priced higher than platinum for the most part ever since.
If you were to buy platinum now, the price for a troy ounce of platinum would be lower than pure gold for the same quantity. But platinum jewelry is still pricier than an equivalent gold piece as the latter is usually melded with other metals for rigidity, bringing the costs down. On the other hand, platinum is rigid enough to not necessitate blending with other metals.
Varied Applications
Platinum is highly malleable, making it ideal for industrial applications. It’s used in catalytic converters (a pollution control device in cars), a plane’s turbine engine, medical devices, and, of course, to make jewelry. Due to its high electrical conductivity, platinum is used in electric power generation and fuel cells.
Platinum is primarily used in emission control applications on diesel-fueled and gasoline vehicles in the automobile industry. The automotive sector has the most significant platinum demand of any other industry. The industrial metal is used almost exclusively in autocatalysts, spark plugs, and sensors. Platinum’s usage in autocatalysts accounts for more than 95% of the overall demand in the segment.
The platinum alloy is used for coating computer hard drives in tech and electronics. In the medical industry, platinum is used in cancer treatment medications and alleviating conditions like Parkinson’s disease.
Reasons Platinum is Not Investor-Friendly
The above unique characteristics may make platinum seem the best metal to invest in. Unfortunately, it isn’t the best, and the following are why.
Not Stable
Rarity may seem like a positive trait, but it doesn’t work when something is too rare. Platinum’s “rarity” hasn’t done much to boost the metal’s prospects besides jagging up its prices and making it look move coveted.
The scarce natural presence has hurt the perceived reliability of the metal. And when combined with lower liquidity and mining difficulty, platinum becomes increasingly vulnerable to price fluctuations. Its strong link to the automotive industry is also a reason for its non-stable prices.
Gold comparatively is a lot more stable. The lack of stability with platinum prices is why the metal is now trailing gold on the price front.
Not an Alternate Currency
Many individuals and governments store gold as an alternate currency due to the yellow metal’s perceived value. Platinum, unfortunately, has no such reputation in the market or among the general public due to it lacking price stability, as mentioned above.
It has, therefore, never been a refuge precious metal during times of economic uncertainty. The subprime mortgage crisis of 2008, no doubt, has had a significant impact on platinum’s price, continuing to trail gold since then.
No Mass Appeal
Platinum doesn’t have the mass appeal like gold. It’s not celebrated in certain cultures and communities. It’s usually looked at as a metal of the elite. Platinum is generally sought after by people who have basic knowledge about the metal.
One of the significant reasons gold gets so much love from the general public is its striking color. On the other hand, platinum looks quite non-precious metal-like in comparison and doesn’t vow the onlooker the way gold does.
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What Should You Invest In—Gold or Platinum?
It should not be difficult to decide which metal among gold or platinum is the better investment. Price stability is arguably the most significant reason the yellow metal deserves your investment cash more than platinum or any other metal. Other precious metals do not rally or stand their ground the way gold does during tough economic times.
Although platinum is precious and rare, its overreliance on auto sales makes it an unattractive metal to stock up on during a financial crisis. But when there’s an economic boom, investing in platinum makes sense. When manufacturing industries are doing good, pour some money into platinum to benefit from the higher immediate returns up for grabs.
How to Invest in Gold or Platinum?
Gold and platinum could be procured in their physical forms (bullion coins, collectible coins, etc.) from precious metals dealers, brokerage firms, coin dealers, certain banks, etc.
Collectible gold or platinum coins can sell for more than their melt values. If you like to collect coins high on aesthetics or historicity, look at the American Eagle Platinum, Maple Leaf Platinum, Austrian Philharmonic, etc. These coins come in gold too. Here is our list of the most valuable gold coins you may check to learn more about gold coins to invest in.
If you’re not a big fan of purchasing precious metals physically, consider gold or platinum stocks, ETFs, mutual funds, etc. If you’d like to learn all the different legitimate ways to invest in gold, check out our complete guide on buying and investing in gold.
Talking about investing in digital platinum, buying platinum stocks is like putting money in any other precious metal stock.
- Sign up with an online trading platform or broker.
- Open your brokerage account
- Put money into the account
- Look for the right stock to invest in
- Ascertain the number of shares you’d like to buy
- Purchase the stock after choosing the order type (limit orders, stop-loss orders, market orders, etc.)
If you’re a bit risk-averse or are incredibly wary of the volatile nature of platinum, which platinum-mining companies are not immune to, look at a platinum ETF for some much-needed diversification. GraniteShares Platinum Trust and Aberdeen Standard Physical Platinum Shares ETF are excellent platinum ETFs to get started with.
Conclusion
When bitcoin was first introduced in 2009, its price was well below a dollar. Things started to pick up for the cryptocurrency only in 2016, with bitcoin trading for close to $1,000. Today, one bitcoin is worth several thousand dollars.
Those who bought bitcoin early have benefited immensely. If you consider those folks lucky, you’re wrong. They just chose to do something others investing in precious metals weren’t doing. For new investors and even seasoned ones, the bitcoin analogy teaches you to put your money where your heart is and not just blindly follow the markets.
If you believe platinum is a good investment, go ahead. But don’t get too pumped up. Ensure relatively less platinum occupies your portfolio so that there’s enough room for gold and other investments to balance any possible pushbacks you could receive from platinum.
