What makes it so special?
Called the rich person’s gold, platinum is renowned for being the rarest of all precious metals. It is rarer than gold by almost 30 to 1.
A mere 170 tons are annually mined, which makes it hard to meet the demand. In Australia, only 0.1 metric tons were mined last year. Therefore it trades at a premium when compared to gold.
Applications of this precious metal:
To answer the question, who is the largest consumer of platinum? The answer would be the automobile industry. It is turned into catalytic converters that make the fumes from internal combustion engines in appliances less toxic.
The demand for this application will only grow as stricter air standards protocols are coming into place everywhere in the world. The flourishing East Asia markets are demanding more vehicles, so the need for controlling pollution rises.
In the case of durability, it scores high even more than silver and gold. The jewellery demand is through the roof in countries like India and China. People value them highly for their unique appearance, high shine, and non-tarnishing properties.
Industrial and Jewelry use makes up almost 90% of the total demand for this precious metal. It is a billion-dollar market that is only seeing positive growth for the upcoming years.
What does it mean for Investors?
Now about the crucial aspect of how it benefits investors and those buying platinum bullions. It holds promising opportunities both in terms of wealth storage and speculation on its growth in the future.
Although its prices underwent a roller coaster ride in the past year, it is gaining its position back on top now. According to the Investment council, the demand surged by 291% in the third quarter of 2020. It happened because investor interest increased based on positive developments.
Similar to silver and gold, platinum is also traded all year round on the global market. It tends to fetch higher prices than gold in regular market periods and times of political stability simply because it is rare. Comparatively, far less of this metal is taken from the ground annually.
Factors that determine the price:
Since platinum is an industrial metal, as was mentioned earlier, the greatest demand is from the automotive industry. Its benefits in reducing toxic emissions are significant. After this comes the jewellery demand. Chemical refining catalysts, petroleum, and computer industries use up the remainder.
The reliance of the auto industry on this metal influences its prices. The production numbers and auto sales affect the rates. “Clean air” legislations globally require carmakers to install an increasing number of catalytic converters.
So is it a good investment?
Finally, talking about the question that everyone wants to know the answers to, is it worth investing in 2021? Yes, precious metals offer inflationary protection, and they have intrinsic value regardless of the economic conditions. They have no credit risk and do not inflate. It means that one cannot print more of these. They offer a unique ‘upheaval insurance’ concerning political or military upheavals.
From the investment perspective, precious metals present a negative correlation when one compares them to asset classes such as stocks or bonds. What it means for an investor is that a small percentage of platinum in a portfolio minimizes both risk and volatility.
Investing in platinum bullions is an effective means of diversifying one’s portfolio. Success depends on analyzing all risks and setting achievable goals. One can harness the volatility of these precious metals to accumulate more wealth.