Platinum is a valuable metal with useful functions in various industries, ranking it number three in terms of most traded precious metal on a global scale. It is used in healthcare, jewelry, industrial applications, and the automotive industry.
One of the selling points of platinum is that it is incredibly rare and difficult to mine since it requires advanced technology. Platinum ores are situated deep in the Earth’s core, making it difficult for people to accumulate this particular resource.
However, platinum investments provide lucrative opportunities for people looking to increase their wealth and safeguard it against economic uncertainty. Before you can begin this journey of investing in platinum, you must understand its place in relation to other precious metals.
Let’s explore more details about investing in platinum and how it provides opportunities for investors to increase their wealth.
Investing in Platinum: Comparison With Gold
If you’re looking to invest in platinum, you should know that it is not much different from investing in other precious metals like gold or silver. As mentioned above, platinum is a much scarcer metal than gold and thirty times rarer, making it extremely valuable. However, you would expect platinum to cost much more than gold, which is not the case.
Since the vast majority of global platinum production originates from South Africa and Russia, it stands to reason that prices would fluctuate in accordance with regional political instability. Russia is currently involved with Ukraine in a messy conflict situation, while South Africa has its fair share of political problems.
Basically, when governments and regions are stable, platinum prices are lower. The greater the political instability, the higher the prices. One comparison point between gold and platinum prices is that the former is affected mainly by fear, while the latter is affected by supply and demand.
Fluctuations in dollar value also affect the supply of platinum since it is mainly bought in dollars. When the supply is weak, the prices rise, creating risky situations for novice or beginner investors. Additionally, since platinum production is concentrated in two main regions, you can expect advantages and disadvantages to investing in platinum, depending on global circumstances.
By the end of 2020, we saw an increase in global platinum demand since financial markets worldwide began to recover following the pandemic crisis. Due to an outage at a major platinum production plant, the supply went down dramatically, increasing platinum prices by up to 20%. In comparison, gold prices dropped by 15%.
Comparing recent trends of the 2021 supply issue compounded with the global COVID outbreak and the 2008 financial recession, platinum outperformed gold by a significant margin between 30% and 65%.
Investing in Platinum: Is it Worth it?
Beginners are normally dissuaded from investing in platinum since its prices are fairly volatile and depend on the factors described above. Although it outperforms gold in most cases, you can expect serious fluctuations when thinking in shorter timeframes of 3 to 5 years. Despite outperforming gold during the financial recession of 2008, it quickly dropped in value by over 60%, resulting in platinum prices finally leveling out with gold.
If you want to invest in platinum by buying physical bars, investing in precious metal companies, or online through ETFs, get the market timing right after researching and staying ahead of the curve. You also need to ask yourself key questions, such as when to sell and what to do when the market begins fluctuating.
Unless you’re an expert investor and know a great deal about the precious metal industry, you may not get the best results since the prices are highly volatile, and you would get better results from investing in a precious metals fund.
Investing in Platinum: How to Do It?
Investing in platinum is not a complicated process since there are clearly laid out steps for anyone to follow. You can find the most credible dealers to work with by researching their reputation and professionalism. The simplest way of acquiring platinum is to purchase physical bars or coins through dealers.
You can also visit the online platinum market. It’s open 24/7 and verified by the WPIC, offering the most competitive prices, and is. The online scene is also kicking off, and people are beginning to invest in platinum through exchange-traded funds (ETFs), another route with pros and cons.
Depending on your preferences, you can choose to invest in platinum mining companies by buying shares. Before investing, research the top companies in the market, such as Impala Platinum Holdings. This strategy is beneficial because bigger companies are not likely negatively impacted by downturns in spot prices.
However, if you’re new to this or even a novice investor, you should consider speaking to financial professionals who can guide you through the process and point out any blind spots you might have. A fiduciary is legally required to put your needs above their own, making it useful to consult them for any investment bits of advice related to platinum. They also do not receive a commission from putting you down a particular investment path, meaning they are well-suited for investment advice.
When you’re just starting with a platinum investment, you should take time not to rush the process and consult professionals before reaching a final decision. This obviously depends on several factors, such as your experience as a gold investment dealer, how much risk you’re willing to take, your current financial position and time horizon, etc. In today’s world, it becomes easy to lend credence to what other people are doing and blindly follow in their footsteps, which is why you must learn the various processes of smart investment and learn to differentiate between credible and non-credible information.
Orion Metal Exchange has been buying, selling, and trading gold and silver ira for more than 40 years and can take you through the ins and outs of the platinum investment process. Contact them today to learn more about their services and book a call with them at 1-800-559-0088.
