Selected Bullion Investment Products: Platinum

Silver Coin

Introduction

 

Platinum is a chemical element with the chemical symbol Pt and an atomic number of 78. Its name is derived from the Spanish “platina del Pinto,” or “little silver of the Pinto River.” It is a dense, malleable, ductile, gray-white metal that is one of the rarest elements in the Earth’s crust. It occurs in some nickel and copper ores along with some native deposits, mostly in South Africa—which accounts for 80% of the world production. Platinum is generally non-reactive and exhibits a remarkable resistance to corrosion. The metal has widespread industrial applications, with current uses in catalytic converters, laboratory equipment, electrical wires, thermometers, dentistry equipment, jewelry, and coins.

Platinum as an Investment

Platinum has a much shorter history in the financial sector than either gold or silver, which were known to ancient civilizations. Platinum was not referenced in European writings until the 16th century, and it was not until Antonio de Ulloa published a report on a new metal of Colombian origin in 1748 that platinum became investigated by scientists. This is because platinum is relatively scarce even among the precious metals. New mine production is only about 5 million ounces per year, whereas annual gold and silver production is approximately 82 million and 547 million ounces, respectively.

The price of platinum changes along with it’s supply and demand. During periods of sustained economic stability and growth, the price of platinum tends to be as much as twice the price of gold, whereas during periods of economic uncertainty, the price of platinum tends to decrease because of reduced industrial demand—often falling below the price of gold. Thus, a portfolio leveraged with a combination of gold, silver, and platinum may afford a more consistent store of wealth, regardless of global economic conditions.

Like gold and silver, the price of platinum has advanced considerably in the past decade. The spot price increased from under $400 in 1998, to a high of over $2,200 in May of 2008― an increase of 450% in 10 years. That averages to an annual gain of 45%, only several percent short of gold’s gain over the same time period. By 2017, platinum prices have corrected to the $1,000’s, which potentially represents a great buying opportunity. Best of all, many mainstream market analysts are predicting significant gains in the platinum market long-term, with estimates as high as $3,000 to $5,000 per ounce by 2020. Platinum thus remains a trusted store of value and continues to enjoy significant attention from precious metals investors.