Did you know there is more platinum on the moon and in meteorites than in the Earth’s crust? That rarity is just one reason the naturally-occurring element is commonly called white gold.
Platinum is extremely rare — more rare than silver and about as scarce as gold. Yet only a fraction of the metal has been mined, while vast quantities of gold and silver have been taken from the earth over thousands of years.
However, platinum doesn’t seem to hold the same financial clout as gold and silver. This often leaves investors in a bit of a dilemma: Should I steer clear of platinum, or start including it in my precious metals portfolio?
Scroll down to uncover five reasons platinum bullion has just as much to offer as silver and gold.
1. Diversifying your portfolio reduces financial risk.
Most investment professionals agree on the importance of diversification in your portfolio. Diversifying reduces financial risk by spreading investments among various markets and, when done the right way, can maximize your return by investing in different areas that react uniquely to the same event.
For example, let’s say your portfolio only consists of oil stocks. If a sudden breakthrough in affordable solar-powered energy became public, your oil shares would probably take a serious nosedive and your entire portfolio would experience a drop in value.
However, if you were to offset your oil stocks with a few investments toward renewable energy, only a portion of your portfolio would be affected. In fact, there’s a good chance your renewable energy stocks would skyrocket as oil lost ground in the market.
The lesson here: Never put all your eggs in one basket.
2. Platinum has industrial value.
One of the main champions of the platinum market is the industrial world. Platinum is a highly durable, malleable and ductile metal — more than gold and silver — making it valuable for many electronic and medical uses, as well as for catalytic converters in vehicles, which account for 40% of platinum use.
Worldwide sales of cars and light vehicles are expected to hit 87.2 million units by 2014, according to British research firm LMC Automotive, in part due to rapid infrastructure development in China.
As the worldwide automotive industry gains momentum and emissions standards across Europe tighten, industrial demand for platinum is not likely to slow down anytime soon, no matter how the commodities market trends.
3. It’s easier to keep track of the platinum market.
Platinum is a much smaller market than gold or silver, which means you can stay up-to-date on all the latest news and trends. Coin collectors and investors of gold have to spend lots of time and energy not falling behind in the ever-fluctuating dollar price of their assets, whereas the platinum market is typically not as volatile.
4. Asia.
China’s seven percent growth in auto sales isn’t the only reason platinum demand is at an all-time high in the region.
Today’s Chinese jewelry industry accounts for 35 percent of global platinum demand, according to ETF Securities research. In the past five years alone, platinum jewelry demand has doubled in China and is expected to continue rising as we see growth in the country’s middle-class.
And don’t overlook China’s populous neighbor India, which has always held a cultural affinity for precious metals and stones. Overall, in the last 10 years, global demand for platinum investments has increased 30-fold.
5. Increasing demand and stalled supply may drive up prices.
Recent mine strikes and political turmoil in South Africa have put a pause on platinum production, causing mining firms like BofA Merrill to lose money on an estimated 45% of production.
To understand just how big of an effect this may have on the platinum market, consider this:
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Seventy-three percent of the world’s supply of platinum comes from South Africa
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Nine of the 10 largest platinum mines in the world are in South Africa
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Since 2006, platinum production in South Africa and Russia has been declining
With supply slowing and demand spiking, analysts expect big changes in the coming months.
Platinum Bars and Coins
As you can see, platinum has so much to offer your portfolio. Rather than relying solely on gold and silver, look into diversifying your investment with one of our 99% pure platinum coins and bars.
Browse our broad online inventory of exquisite platinum bullion coins and bars, or visit our Knowledge Center to learn more about platinum investing today.
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