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7 Interesting Facts about Investing in Platinum

7 Interesting Facts about Investing in Platinum

There is a reason high street banks have often called their higher income account their 'Platinum Account'. The word platinum is synonymous with high value, timeless quality and trusted investment. But why is this? Learn more in our list of 7 interesting facts about investing in platinum.

  

The Royal Mint's Queen's Beast 1oz Platinum Lion Coin now available from Bleyer 

1. All-Time Price Shifts

As an investment metal, platinum has been making some remarkable price moves and has been considerably favoured amongst investors diversifying their spread across a range of physical precious metals. Historically, platinum reached an all-time high in March 2008 and a record low in January 1972. The below price (USD) chart demonstrates platinum's general bullish outlook since 1965. The reasons for this will be discussed later.

 

Graph showing platinum's price from 1965 - 2019

Source: Macrotrends.net

 

Did you know - the cost of platinum peaked in 2008 due to problems with platinum mines and investors capitalising on this price surge registered a good amount of profit? Look for the right opportunity and time to trade in platinum and key your eyes on key fundamentals of this metal.

 

2. Recent Price Shifts

In the past three years, platinum's volatility can be truly seen with a more bearish trend. The long-term view of this metal is most certainly not the same as the short-term. A general downward trend can be seen with short peaks and troughs during times of market and economic uncertainty. It is within these price movements where investment money can be made in the short-term. The below price (GBP) chart shows platinum's moves from the past 3 years:

 

Graph showing platinum's price from last year years (2016 - 2019)

Source: LBMA.com 

3. History and Origins

When the Spanish explorers first came across the metal during a 16th-century expedition in Colombia, they gave it the name 'platina' or little silver, and thought it nothing more than an unwanted impurity in gold and silver mining.

In fact, it wasn’t until the 19th century that a method of producing malleable platinum was found and catalytic properties of the metal were studied. In 1842, the first fuel cell was devised using platinum electrodes. In the 1950s, Platinum has been used to increase octane ratings in gasoline. In the 1960s, the metal quickly gained popularity as jewellery with rising demand in the following decades across Asia, Europe and the US. In the 1970s, platinum became even more popular after the US introduced new regulations on air quality leading to the metal being used as a catalyst, converting noxious gases into safe substances in car exhausts. Since the 1980s, it was also an important component in the rapidly-expanding plastics industry. Today it's used by the tech industries in a range of different applications.

 

Did you know - South Africa and Russia are now the two largest producers of platinum in the world? South Africa produces 60% of world supply but platinum is also mined in the US, South America and Canada.

 

Nuggets of Platinum in it's natural state

 

4. Rising Industrial Use

Demand for platinum in high-technology applications is soaring due to its unique properties. It is virtually impervious to corrosion, has a high melting point in alloy, is a powerful catalysing agent and is highly conductive. This makes platinum essential in a wide range of industrial and environmental applications; gasoline, hard disk drives, anti-cancer drugs, fiber-optic cables, LCD displays, eyeglasses, fertilizers, explosives, paints and pacemakers all rely on platinum. Platinum is also the key catalyst used in fuel cells. 

The white metals of silver, palladium and platinum are just as much about rising industrial production and global growth as they are about hedging against inflation or providing a safe-haven investment. Buying platinum is an easy way to invest in worldwide economic growth because the metal is essential to the economies of many industrialised nations. For investors, the white metals can capture much of the upside in the global economy as well provide some downside protection. 

 

Did you know - Over 20% of all consumer goods either contain platinum or are produced using platinum? As a consequence, the continued expansion of advanced and developing economies has caused demand for the metal to grow at a faster pace than it is being mined.

 

Melting Platinum for industrial use

 

5. Platinum vs. Palladium Price

When compared to other investable precious metals, platinum is an interesting one to watch. In relation to the price of palladium, for example, the cost spread in the years leading up to the 2008 financial crash had widened, but after 2008 the gap had closed. On average, platinum has always been more expensive than palladium, but most recently in the Autumn of 2017, palladium overtook platinum as a result of global shortages, for the first time since 2003. What this means from platinum in the long-term remains yet to be seen. The below price (USD) chart shows platinum and palladium's price moves from 1970 to late 2017:

Graph showing monthly price average of Platinum and Palladium from 1970 - 2019

Source: Mining.com

6. Platinum vs. Gold Price

Although not directly related, it seems pertinent to address the similarities in price between platinum and gold. In many ways, it is unfair to compare these two metals, as one is industrial and the other purely an investment metal. 

Similar correlating spikes in price can be seen in both metals however. The very factors that increase the price of gold (geopolitical tension, currency devaluation, natural disaster, war, trade disputes) have the potential to inversely affect the price of a predominantly industrial metal.

This is why some precious metal investors like to have a spread of a range of physical precious metals. In order to hedge against unpredictable markets, playing these metals against each other can sometimes ensure maximum return on investment. When gold does badly, platinum has the potential to go up and vice versa. We recommend you do thorough research before investing in any precious metal however, and play close attention to market sentiment and economic news. 

 

Graph showing Gold Platinum percentage growth from 1970 - 2019

Source: Macrotrends.net

 

7. Why Platinum Coins Are Cheaper Than Bars

A broad portfolio of precious metals is always something to consider and platinum is a useful metal that shouldn't be overlooked. The next step would be deciding on whether you want to invest in physical platinum bars and coins or ETFs (Exchange Traded Funds).

 

Read 'Is Owning Physical Precious Metals Better Than Owning Paper Contracts or Shares?' here. 

 

Buying platinum coins have benefits over platinum bars in that you can benefit from the same Capital Gains Tax advantages as for Silver and Gold if you go for coins from your own country like Britannias and Queens Beasts, for the UK. Like with the silver margin price scheme, full VAT isn't charged on platinum coins, so although the basic price is higher than for bars, Bleyer can make buying physical CGT free coins slightly cheaper than buying physical bars for retail customers. Not every bullion dealer has the same rates or even offers platinum as an investment metal, so make sure you choose one you trust.

 

The most popular platinum coins in the UK:

  • 1oz 2019 Platinum Britannia Coin
  • 1oz 2019 Platinum Canadian Maple Coin
  • 1oz 2019 Platinum Queen's Beasts Unicorn Coin
  • 1oz 2018 Platinum Queen's Beasts Dragon Coin
  • 1oz 2018 Platinum Queen's Beasts Griffin Coin
  • 1oz 2017 Platinum Queen's Beasts Lion Coin
  • 1oz Platinum Australian Platypus Coins

 

Adding physical platinum to your portfolio is straight forward and easy. Bleyer offers the option of investing in the forms of 1oz Platinum Coins and Platinum Bars of 1oz, 5oz, 100g, 250g, 500g, 1kg and owning your own has never been easier.

Take a look at current investment opportunities in Platinum. As always, it is recommended that readers conduct their own additional research before investing in precious metals. Call or email Bleyer now to start or increase your investments in actual Physical Precious Metals you can hold or store. Call us on 01769 618618 or email [email protected].

  

A 1oz platinum Britannia coins now available from Bleyer's website

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