Platinum, a silver-colored metal, is durable and dense metal commonly used in manufacturing of car and plane parts. Gold is a yellowish metal that is popularly used to create jewelry. In general, platinum is not a better investment than gold.
Gold is more stable, more easily mined, and does not fluctuate in price as much as platinum. Gold is more steadily in demand than platinum. The industries that gold is most commonly used in—jewelry, electrical, and medical—rely less on economic factors to influence its demand.
The value of platinum, however, is directly tied to manufacturing, specifically in the creation of catalytic converters. Because its demand goes up and down, so does its price. More recently, however, gold has been priced higher than platinum. Select personalised content. Create a personalised content profile.
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Gold and silver have been recognized as valuable metals and have been coveted for a long time. Even today, precious metals have their place in a savvy investor's portfolio. But which precious metal is best for investment purposes? And why are they so volatile? There are many ways to buy into precious metals like gold, silver, and platinum, and a host of good reasons why you should give in to the treasure hunt.
So if you're just getting started out in precious metals, read on to learn more about how they work and how you can invest in them. We'll start with the grand-daddy of them all: gold. Gold is unique for its durability it doesn't rust or corrode , malleability, and ability to conduct both heat and electricity.
It has some industrial applications in dentistry and electronics, but we know it principally as a base for jewelry and as a form of currency. The value of gold is determined by the market 24 hours a day, seven days a week. Gold trades predominantly as a function of sentiment—its price is less affected by the laws of supply and demand. This is because the new mine supply is vastly outweighed by the sheer size of above-ground, hoarded gold.
To put it simply, when hoarders feel like selling, the price drops. When they want to buy, a new supply is quickly absorbed and gold prices are driven higher. Several factors account for an increased desire to hoard the shiny yellow metal:. Unlike gold, the price of silver swings between its perceived role as a store of value and its role as an industrial metal.
For this reason, price fluctuations in the silver market are more volatile than gold. That equation has always fluctuated with new innovations, including:.
It's unclear whether, or to what extent, these developments will affect overall non-investment demand for silver. One fact remains: Silver's price is affected by its applications and is not just used in fashion or as a store of value.
Like gold and silver, platinum is traded around the clock on global commodities markets. It often tends to fetch a higher price per troy ounce than gold during routine periods of market and political stability simply because it's much rarer.
Far less of the metal is actually pulled from the ground annually. There are also other factors that determine platinum's price:. Investors should consider that all of these factors serve to make platinum the most volatile of the precious metals. Lesser known than the above three metals is palladium, which has more industrial uses. Palladium is a shiny, silvery metal used in many types of manufacturing processes , particularly for electronics and industrial products.
It can also be used in dentistry, medicine, chemical applications, jewelry, and groundwater treatment. The majority of the world's supply of this rare metal, which has the atomic number 46 on the periodic table of elements, comes from mines located in the United States, Russia, South Africa, and Canada. Jewelers first incorporated palladium into jewelry in Moreover, it is heavy — a six-inch cube of platinum weighs as much as the average human being.
Platinum has proved itself to be a well-performing investment over the long-term, satisfying the needs of private investors. It is best suited to medium to long-term investors who can withstand short-term volatility and who fully appreciate the precious underpin coupled with its industrial premium based on its value-in-use in industrial applications and supply demand deficits. Furthermore, platinum is well-suited to a thematic investment approach and is linked to global megatrends such as addressing climate change, increased access to healthcare and provision of clean water.
This has resulted in deficits in each of the last five years. These drivers remain in place today. Despite clearly supportive fundamentals, the price of platinum currently sits at historically low levels. With five more deficit years expected, this creates an attractive opportunity for the discerning investor. The main drivers of primary mining output in the long term are the amount of capital allocated to platinum mining, which is a function of the producer incentive price the price of the basket of metals produced through the platinum mining process , compared to the marginal costs of mining.
Increasing emerging market demand for autos, coupled with stricter global emission standards, indicate strong long-term growth characteristics from this segment.
Industrial — Platinum is used in a variety of industrial applications ranging from biomedical devices to the manufacturing of glass fibre, liquid crystal display glass, and jet engine blades.
Growth in industrial usage over the next few years will remain largely driven by global economic growth. For example, platinum is used in the manufacturing of nitric acid for fertiliser, so as the global demand for food increases, the need for platinum will increase. Jewellery — The jewellery market is the second biggest user of platinum, accounting for about one-third of global demand.
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