4 Reasons Why Platinum Is A Good Investment
The term “platinum” is often used to separate high-value services from the more affordable alternatives. For example, some people have “platinum cards” or “platinum memberships”. But the value of platinum isn’t entirely metaphorical. Platinum is a rare precious metal that has plenty of value in the real world.
Instead of investing in that platinum membership with the extra features and high fees you should consider investing in actual platinum. Platinum investments are a great way to diversify your portfolio safely and reliably, especially adding it to a precious metals IRA. Many investors use platinum and other precious metals such as silver and palladium as a tool to protect against inflation.
Platinum has many benefits when compared to alternative investment opportunities. Here are just a few of those benefits.
1. Supply And Demand
Platinum is one of the rarest metals on the planet. It also happens to be useful in a wide variety of applications, including jewelry, electronics, vehicles, and medical equipment. These two factors result in platinum having a massive demand with a very limited supply. The imbalance creates a predictable valuation that often increases from one year to the next.
The value of platinum was at its lowest in 1974. Since then, the value has continued to increase and it’s safe to assume that it will continue to do so for many years to come. Of course, it is a commodity and it experiences highs and lows throughout the year. The volatile short-term value of platinum makes it an interesting investment opportunity for investors interested in making quick trades while the reliable long-term value makes it a great option for people who want to hedge risks.
2. Economic Resistance
Most tradeable assets come with a margin of risk that is associated with the country’s current economic state. During an economic crisis or recovery period, those assets can lose a significant portion of their value. Platinum is one of the few commodities that is resistant to this type of economic influence. Precious metals tend to retain most of their value even during serious economic turmoil.
The 2008 financial crisis is a great example of this property. Investors throughout the country lost trillions of dollars during the financial crisis. Some industries, such as real estate, were hit much harder than others. However, precious metals like gold and platinum experienced a very minimal decline. There was an average return of 4 percent on platinum investments for the period between 2006 and 2011.
3. Works Well With Gold
Some investors are hesitant to invest in platinum because they’ve already made an investment in gold. Precious metal IRAs are becoming more common and gold remains the standard commodity for most of these accounts. In many of these cases, platinum may be a better alternative to gold. It also provides additional security when purchased in addition to gold.
They may both be precious metals but their values are not directly linked. Gold and platinum serve two different markets entirely because of their typical usage. Gold is primarily considered an investment metal while platinum is considered an industrial metal. Platinum has many industrial uses and there is a constant demand for it.
Some of the same factors can influence the value of industrial and investment metals. However, these factors influence their values in different ways. This means that the same factor that causes an increase in the value of platinum can cause a decrease in the value of gold.
Investing in both types of metals creates a safety net against losses. When the value of gold drops your platinum will increase in value to protect your investments. And when the value of platinum dips your gold investment will provide the protection. This is one of the reasons why diversification is such an important concept.
4. A Bright Future
The price of platinum is in a unique position that makes it a great time to invest. The current value is lower than average due to decreased production rates in key countries like South Africa. It has experienced some turbulence during the last two years due to the rise of Covid, but that turbulence is slowly becoming history. Production is returning to normal in many locations and the demand is climbing higher than ever before.
Many experts estimate that the value of platinum will increase over the next five years. Investors who take this opportunity to get ahead of the growth are likely to experience better returns. Despite some setbacks, platinum remains a safe and reliable long-term investment for many investors.
Make Platinum Investment A Smart Move
Precious metal investments won’t help you become rich overnight. It isn’t a money-making scheme where only a few lucky individuals actually profit. Instead, it’s a safe way to diversify your portfolio and protect your retirement account. The steady growth of platinum reduces the long-term impact of inflation on other investments and reduces your losses during unpredictable economic setbacks.