Platinum vs. Gold Investment
Most investors are familiar with traditional assets, such as stocks, mutual funds, bonds and exchange-traded funds (ETFs). But if you have the goal of diversification, you may want to look toward other investments. Platinum and gold are two precious metals and nontraditional assets that investors may use for financial benefits, such as hedging against inflation. Each one comes with unique advantages and disadvantages that makes them better suited for specific types of investors.
Consider working with a financial advisor as you decide whether precious metals should be part of your investment portfolio.
Popular culture often highlights gold as the most desirable metal. So, you might think that would make it a greater rarity compared to platinum. But, actually, platinum is around thirty times rarer than gold, according to the World Platinum Investment Council. Approximately 190 metric tons of platinum are mined worldwide annually, compared to the 3,300 metric tons of gold.
Platinum doesn’t have the same history as gold. However, it serves a variety of uses, partially due to its structure. It is highly dense but also very malleable, giving it value in industrial settings. So, you find it in the medical field, auto industry, aircraft industry, jewelry and other sectors.
Because of its applicability in a greater number of industries, platinum is driven more by industrial supply and demand, and platinum’s price fluctuates more often than gold.
You can trade in platinum physically, such as with coins, or you can turn to stocks, mutual funds or ETFs that platinum bullion. Alternatively, there are platinum options and futures on the New York Metals Exchange (NYMEX) as well.
Gold has a longstanding history of value, dating back to ancient civilizations. From as far back as the B.C. era to the U.S. gold standard, gold holds a place in our economic systems as well as popular culture.
But while gold formed the backbone of monetary systems before, it now fluctuates according to supply and demand. Gold also has industrial demand, like platinum, due to its use in electronics, dentistry, and aerospace. But industrial applications don’t play as big a part in its price as is the case with platinum.
Similar to platinum, you can invest in gold by buying it physically. That includes collectible coins or bullion from brokerages, coin dealers, precious metal dealers and occasionally banks. If you don’t want to invest physically, you can also purchase stocks, ETFs or that invest in gold. There are also gold products on the NYMEX as well.
Platinum vs. Gold Investment
Over a 32-year span, there were a few historical instances where gold’s price per ounce outperformed platinum. The highest point was in the 1970s, largely due to , which is basically slow economic growth combined with inflation. However, there have been times where platinum held higher value. From 1987 to September 2008, platinum tended to trade at a higher price compared to gold. The price of gold per ounce only started exceeding platinum’s price following 2011.
Both metals are since you trade them for cash relatively easily. But, gold is the more liquid metal due to the high volume of trading which occurs every day across the world.
Platinum’s price comes down to two contributing factors. They are industrial demand, particularly for anti-pollution equipment in vehicle engines, jewelry and medical supplies and mine production. Mines in are a key determinant in the price of platinum as well as production in Russia.
Platinum’s dependency on industrial demand and mine production leads to volatility. In fact, the price of platinum fluctuates the most among . For instance, platinum price hit its peak in 2008 at $2,250. It then dropped to $777 per ounce within six months.
In contrast, gold is more stable and reliable. You are less likely to see erratic price drops in gold due to its intrinsic value. Plus, multiple countries produce , including China, Australia, India, the U.S. and Canada. So, a supply issue in one nation is unlikely to severely impact pricing worldwide.
Some investors may want to prioritize stability and long-term investing. In that case, gold is likely the better option. The precious metal has a longstanding history of reliable demand which often spikes during .
In the end, precious metals have their uses as investments. When political or economic uncertainty strike, investors often turn to alternative or tangible assets to protect their portfolios. Precious metals like gold are just one option available to you. But all investments come with their risks. Platinum carries greater volatility than other choices, making it more susceptible to price drops. Meanwhile, gold is relatively stable, but it may not be a strong over the short term.
- Investing in precious metals like gold and platinum comes with its advantages. They diversify your portfolio, have a long history of value and are accessible. But they involve unique risks and challenges you may not face with more popular investments, such as stocks or bonds. who can help with this doesn’t have to be hard. matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, .
- Every investor faces a potential loss. You can mitigate your risk by diversifying your portfolio with assets like gold and platinum. They carry intrinsic value and offer a potential hedge against inflation as well. You can use our to help you determine the level of funds you want to put into precious metals.
- Please Note: Goldtrends.net posts this article as a means of providing the latest news relating to gold investment. The posting of this article does not necessarily relate to our views, and should not be seen as advice or guidance. Always consult a financial advisor before making any investment choices.