Published on March 14th, 2021 | by Bibhuranjan0
Pros and cons of investing in platinum
When it comes to precious metals, the first ones that immediately come to mind are gold and silver. These two assets are regularly used as a ‘safe haven’ investment, and understandably so. However, while they are considered to be the biggest names in the industry, one particular metal that often gets overlooked is platinum.
This is one of the most valuable precious metals in the world, with its value often exceeding that of gold. Moreover, it is seen as one of the most expensive precious metal commodities. While not achieving gold’s level of popularity, its prominence is still admirable. In fact, its rise in demand has led to various platforms that allow users to buy platinum online.
While platinum has proven itself to be a lucrative precious metal investment, potential investors should be completely aware of the pros and cons of investing in it. There are important factors one should take into consideration before investing.
The cost of platinum reached a peak in 2008 with $2,300 per ounce thanks to issues with platinum mines. Those who could capitalize on this price surge recorded a substantial profit. In a similar fashion, some should be vigilant when looking for the ideal opportunity and time to take part in platinum trading.
Precious metal investments have become popular among investors interested in diversifying their portfolios. Likewise, they are popular with people who want to secure their investments against a crash in the stock market or times of economic uncertainty. This makes it one of the most coveted precious metals in the eyes of investors. It possesses an exceptionally high value to density ratio. The source of roughly 90% of platinum is South Africa and Russia, though a majority of the sought-after metal comes from the former.
Its popularity has grown to a point where, from its emergence as a potential investment onward, there has been a heated debate as to whether a platinum investment or a gold investment is better.
It was about a decade ago that the value of platinum was believed to surpass that of gold. At the time, the was close to 150% of gold. In recent years, though, the increase in demand for gold has effectively pushed it to where it has come close to the price of platinum.
Platinum is an eco-friendly metal that is a component in a myriad of consumer goods. Its demand continues to rise as the magnitude of environmental consciousness proceeds to grow. The metal does not have an easy-to-mine steady supply, and should that supply be limited so that the growing demand can be placated, platinum prices are likely to surge. As a result, it will become more expensive.
As the economies of the world expand, it continues to be touted to be one of the safest and popular choices of investment. For instance, platinum experiences an incredible demand in the automobile industry because it is a key ingredient in the creation of catalytic converters.
Some pros that come from investing in platinum include the following:
· It is an investment that can be exchanged for cash and is easily liquidated.
· If the price of fiat currencies were to drop, there is a chance for the value of precious metals like platinum, gold, and silver to surge.
· The value of gold heavily relies on the US dollar’s value, but platinum is not completely based on it. Therefore, the price will not be affected by volatile changes in the price of the dollar.
· It offers a hedge against inflation, economic uncertainties, and even war.
· It has portrayed a steady increase in the price with very few fluctuations. Because of this, it is considered by investors to be one of the safer choices.
· The boost in platinum demand within the manufacturing sector will guarantee a rise in price in the near future.
For all the benefits, there are a handful of cons to investing in platinum:
· There is less financial history connected to platinum investment, which ultimately dissuades people from putting their money at risk.
· People still opt to invest in more conventional precious metals like gold and silver rather than get experimental with their investments, thereby pushing platinum aside.
· Physical platinum security and storage may prove to be a problem. In fact, there can be extra costs in storage and insurance.
· It has a significantly high spot price, meaning that – to an extent – it can be unpredictable.
· Some may fall victim to fraudulent schemes, like with certain vendors offering overnight platinum delivery and making those who show interest pay. The payment will be debited, but the investment will never arrive.
· South Africa – the location where a majority of platinum is mined – faces various infrastructural and political issues in trying to meet the rising demand.
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