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Whether you’re a novice investor researching your first purchase or an advanced precious metals purchaser hoping to expand your investment portfolio, you may be interested in investing in platinum bullion. Past performance trends combined with rising industrial demand show that platinum investments may be an excellent choice for many investors. A primary factor preventing many from purchasing platinum is a lack of knowledge surrounding its promising potential.
So, what is platinum, how is it used, and is platinum a good investment? Continue reading below to learn the answers to these questions and more. If you need financial advice for your platinum investment, we recommend meeting with a financial advisor.
What Is Platinum?
Platinum is an extremely rare precious metal that primarily comes from northern South African mines. The metal is malleable, rigid, ductile, unreactive, and dense, making it suitable for a wide range of applications. The complex extraction process and limited mining opportunities create a very small platinum supply across the world, resulting in high prices and demand.
What Is Platinum Used For?
The top applications for platinum include the following:
- Automotive industry: Automotive manufacturers use platinum in catalytic converters for gas and diesel engines. Most modern vehicles use this advanced system for reduced emissions, and certain electric cars use platinum in the fuel cells.
- Jewelry: Platinum is a popular metal in the jewelry industry because of its malleability, strength, and attractive finish.
- Industrial applications: Manufacturing industries also use platinum for various products ranging from pacemakers to fertilizers and many things in between.
- Platinum bullion: Often, investors buy platinum in the form of bullion coins or platinum bullion bars to diversify their investment portfolio range.
Is It Good To Invest in Platinum?
Whether or not it’s good to invest in platinum depends on your particular financial goals. Platinum is a relatively new precious metal investment compared to gold and silver. Recent automotive industry demands and complex extraction and mining processes have made platinum bullion incredibly volatile.
Unlike other metals, you cannot look back on hundreds of years of history to see how platinum prices have typically performed in the precious metals market. In the past couple of decades, we can see that platinum prices have fluctuated multiple times, ranging from $2,200 an ounce in 2007 to around $1,000 today. To understand the investment risk levels, you must consider the factors impacting the platinum price forecast.
Factors Impacting Platinum Prices
On the plus side, you can rely on the jewelry and industrial applications for platinum to remain steady, making up approximately 50% of all platinum demand. Unfortunately, 40% of the material’s demand comes from automotive manufacturers, which isn’t so predictable. The automotive industry uses platinum in catalytic converters, though with the movement toward environmentally friendly electric cars, this need may become obsolete soon.
While the above factors may make the platinum market sound risky, you should remember that tangible assets typically offer stronger investment portfolio protection than intangible items, such as stocks. Platinum displays historically higher trading prices than gold despite its larger price swings and shorter history.
When making your investment decision, you should consider your personal risk tolerance and investing goals. Rare platinum coins display the potential for strong economic growth as a significant amount of the global supply dwindles and the market demand increases. However, the uncertainty of automotive demand increases risks.
Does Platinum Hold Its Value?
Because the price of platinum depends on supply and demand and various market factors, we cannot guarantee that it will hold its value. You can retrieve information from past platinum price trends to better understand the associated risks.
Between 1992 and the current year, the dollar value of an ounce of platinum rose from approximately $400 to over $2,000 before dropping back to around $1,000, where it is today. Between 1992 and 1998, the $400 platinum price remained fairly steady, but ever since then, it has constantly fluctuated as market needs change and the supply wanes.
While platinum may show less reliable value retention than other precious metals, you can rely on its rarity. Because of the reduced supply, as more industries use the metal, the price of rare coins may continue to increase. Investing in platinum coins before the supply runs even shorter could offer promising returns, though there are no guarantees.
Is Platinum a Better Investment Than Other Precious Metals?
Platinum is not the only precious metal you can invest in. Many investors prefer products like gold or silver for their reliability and potential to hedge against inflation. So, is platinum a good investment, or is gold better?
Platinum vs. Gold
Deciding which metal is a better investment depends on your goals, as each has advantages and disadvantages. Gold is a tried-and-trusted precious metal investment with a long history of steady price appreciation, even during economic crises. Many investors use this metal as an inflation hedge during economic downturns, as it can protect the value of your hard-earned savings.
Unfortunately, gold values typically don’t skyrocket the way platinum prices do. Rather than fluctuating based on extreme supply and demand scenarios, this metal’s value aligns with economic factors influencing investor actions. You can often rely on gold investments to offer steady growth over long periods with no major gains or losses.
If you don’t mind the increased uncertainty associated with platinum and you prefer taking your chances for a larger reward, you may want to choose platinum over its counterpart. Both metals offer excellent liquidity, so you shouldn’t have issues trading. You can open IRAs with many precious metals, including gold, platinum, silver, and palladium.
How To Invest in Platinum
If you decide that investing in platinum aligns with your financial best interests, you have four main options. Most investors choose one of the following platinum investment methods:
- Platinum bullion: You can purchase platinum bullion bars and coins with direct delivery to your home. If you choose this route, you will need to handle secure storage for your investment. When you decide to sell, you can make trades with most major precious metals dealers.
- Platinum IRAs: Platinum IRAs allow you to fund your retirement account with precious metals, like platinum, rather than traditional fiat money. You can open a precious metal IRA with many IRS-approved organizations, fund it with cash, and use the funds to purchase bullion.
- Platinum EFTs: Platinum exchange-traded funds (ETFs) allow you to track prices, practice platinum trading, and gain exposure to the metal without physically maintaining and securing it.
- Platinum futures: If you’re interested in trading, you can also select platinum futures for trading on the futures market. Typically, this option requires the most advanced experience and knowledge, so novice investors may prefer one of the above investing methods instead.
Platinum Bullion Products You Can Buy
If you’re interested in investing in platinum bullion, you have two main options: coins and bars. Review more information about platinum coin and bar investments below.
A few different government-run and private organizations produce platinum bars. You can find bars in varying weights, typically including one, five, and 10-ounce options. At Oxford Gold Group, we offer a one-ounce platinum bar, eligible for IRAs, with a 0.999 purity composition.
Platinum coins are popular among many investors. Some of the top platinum coins you can invest in include the following:
- 2019 Platinum Bottlenose Dolphin: As legal tender under the Australian Currency Act of 1965, this coin from the Perth Mint offers 99.95% purity and a striking design of two bottlenose dolphins creating a heart.
- American Platinum Eagle: The American Eagle coin is an official United States Mint platinum coin featuring .9995 purity, a range of size options, excellent liquidity, and fair costs.
- Platinum Austrian Philharmonic: The Austrian Philharmonic coin is a top-performing investment product that comes in many different metals, including platinum. The unique design and reputable purity help this coin retain its value.
- Platinum Canadian Maple Leaf: The Platinum Maple Leaf is another classic choice that offers impressive purity with a range of size options and relatively high liquidity.
Platinum Bullion Considerations
Before you invest in any bullion, you want to make sure you’re purchasing high-quality products for solid financial decisions. We recommend considering the following:
- Sourcing: Unfortunately, many counterfeit online retailers sell low-quality products with inadequate purities. You should only purchase bullion from trusted dealers with solid reviews and appropriate certifications.
- Storage: Depending on how much bullion you purchase, you will need to consider your storage options. While you can keep a few coins at home in a safe, you may want to consider opening an IRA with IRS-approved vaults for larger investments.
- Liquidity: Liquidity refers to how easily you can sell and trade different investments. Typically, investors prefer products they can easily sell and profit from when the time comes.
- Cost: You will likely pay over the coin or bar’s spot value, especially for more liquid products. We recommend considering such premiums when making your investment.
Can You Put Platinum Precious Metal Investments in Your IRA?
Yes, you can make platinum bullion contributions to your IRA. The IRS requires you to meet various criteria regarding the coin or bar’s purity and vaulting facility security. At Oxford Gold Group, all of our platinum products meet IRS eligibility.
Should You Invest in Platinum?
So, is platinum a good investment?
As we approach the new year, many want to finalize their investment strategies. Platinum may be an excellent addition to your portfolio, depending on your risk preferences and financial goals. We recommend speaking with your financial advisor when considering your options.