Investing in precious metals can be a great way to diversify your personal investment portfolio. Of the three precious metals, platinum is by far the rarest and most volatile, offering investors unique opportunities.
What Is Platinum Bullion?
Platinum bullion is a highly desirable metal that offers buyers a commodity that can be held and traded as a hedge against economic down turns.
Like other precious metals such as gold, silver, and palladium, platinum is a tangible and portable commodity (You can hold it and take it with you).
Not including high-end jewelry (just under half of all platinum is used by jewelers), platinum is required in many industries. Automobile manufacturers use platinum in diesel catalytic converters, the petroleum industry relies on platinum for the production of high-octane gas, and platinum-based drugs are used in cancer chemotherapy treatments. Platinum is also an essential component in chemical, electrical, and industrial processes.
Platinum’s scarcity makes it a precious metal. If platinum mining stopped today, industrial needs would be out oif the metal in about a year; while gold would last about 25 years.
Platinum has an extremely high melting point and is not as soft as other precious metals. Therefore, only a few mints produce platinum materials compared to other precious metals like gold and silver. There are only a few mints that make any platinum at all. Very few platinum coins and rounds are available, which drives up the price of these investments.
Types of Platinum available
Platinum bullion bars and platinum coin.
Platinum coins are from governments and have a face value that is lower than the intrinsic value of the metal content. Examples include the American Platinum Eagle, and Canadian Platinum Maple Leaf.
The most popular coin size is one troy ounce, and the mandated purity is 99.95%.
If you wan tot invest in platinum bars, buy the largest bar that you can afford, because manufacturing costs are the same for large and small bars, and you are paying a lower premium per gram when you buy a large bar compared to a small one. It is less expensive, per gram, to buy one 1 ounce bar than it is to purchase four 1/4 ounce bars.
PAMP and Credit Suisse produce the majority of the platinum investment bars.
Platinum bullion normally mirror gold prices, and the premium over spot price is about the same as gold. however, by December of 2015 the value has dropped to $890 per ounce compared to Gold at $1085 per ounce.
The old saw, that when comparing gold to platinum, "If you can trade gold for platinum at even money, ounce for ounce, do it!" comes to mind