Platinum is much rarer than both gold and silver — so rare that all the platinum ever mined could potentially fit in your home. The rarity of platinum cannot be overstated because it has a vast array of uses, particularly industrial uses, including catalytic converters, laboratory equipment, and even dentistry equipment.
One of the most important reasons people buy platinum is because it helps balance their portfolio. Some investors are comfortable buying what they know, such as gold or silver. However, investors looking for an edge realize they must look to under-tapped markets like platinum. The platinum spot price often increases with economic downturns, the devaluation of the U.S. dollar, and geopolitical turmoil. Supply and demand also make platinum prices attractive.
Platinum Prices
When someone is referring to the platinum prices, they are referring to its spot price. The spot price of platinum is the price of a raw ounce that can be bought and sold on the precious metals market. Platinum prices are typically listed in USD but can be converted to local currency. Platinum prices constantly change throughout the world market hours based on market conditions, affecting the supply and demand for platinum worldwide. Staying current on significant world events or market news by checking market reports or expert assessments is the best way for an investor to remain aware of platinum prices. Keep track of today’s platinum price with the APMEX app. Download it from the iOS App Store or Google Play Store.
History of Platinum
Traces of platinum were discovered in gold dating back as early as 1200 BC in ancient Egyptian hieroglyphics and European writings around 1560. Platinum is a scarce metal found only in small concentrations in the Earth’s crust and has also been identified on the moon and in meteorites. In early discoveries, most thought platinum to be an impurity in gold instead of a precious metal holding its value. Despite the difficulty of obtaining and mining platinum, there is proof that it has been valuable and present throughout history. With modern mining techniques, platinum is easier to get. Its properties and uses in various industries have since significantly increased its value.
Industry Uses
Platinum is a hot commodity in the manufacturing industry. It is prevalent in constructing cars and various other electronic equipment. As a result, the progress of these individual industries directly impacts platinum prices. Being aware of all the different uses for platinum worldwide will help an investor form purchasing strategies for this popular metal.
Automotive Industry
Almost half of the annual platinum production goes directly to the automotive industry to help control vehicle emissions. In 1974, the United States set new regulations for better air quality, which led to the creation of autocatalysts. An autocatalyst uses platinum to convert poisonous gases from car exhausts into harmless substances. According to the CME Group, a world-leading precious metals market group, the automotive industry accounts for 40% of the annual platinum demand. The high demand for platinum in the automotive sector accounts for much of the price.
Industrial Uses
Industrial supply and demand for platinum include chemical, medical, glass, petroleum, and electrical uses. Industrial platinum demand is typically determined by global economic growth or technological advances relying on the metal for its creation. Platinum is known for its combination of chemical and physical properties, which benefit industries like manufacturing due to its high melting point and stability. Other less well-known applications for platinum include medical machinery electrodes and turbine engines.
Jewelry
High-end jewelry accounts for a third of platinum mined every year. When mixed with other platinum group metals, platinum creates a highly stable and noncorrosive metal perfect for jewelry. The unique combination of platinum metals makes the jewelry resistant to wear and tarnish, making the product hold up better over time. Platinum has remained a popular option for buyers in the market for new jewelry.
Things to Consider Before Investing in Platinum
Now that you know about the history of platinum, the many uses of this unique precious metal, and why it is such a hot commodity, it is time to dig deeper into the risks associated with investing in it. The price of platinum is determined by two essential factors: mine production and demand from the jewelry, medical, and vehicle industries. The mines are in South Africa and Russia and often involve geopolitical turmoil. This creates problems with the supply from the mine, which drives the price up. Of all precious metals, platinum has the highest value fluctuations. For example, the prices peaked at $2,250 in 2008 and dropped harshly to a mere $777 per ounce within six months. Pay close attention to the prices of your platinum investments and use caution when planning to sell. There are patterns within the historical data, but things can change rapidly in the mine locations’ geopolitical climate, drastically affecting the value. Another thing to pay attention to is the gold-to-platinum ratio, which compares the value of platinum to the value of gold.
The Gold to Platinum Ratio
The gold-to-platinum ratio indicates how much platinum it takes to buy gold. It shows the relative strength of gold prices compared with platinum prices. Investors can use the ratio as a timing indicator when purchasing gold or platinum. For those looking to capitalize on these market dynamics, exploring platinum bullion products offers a direct way to engage with this intriguing metal, mainly when its value relative to gold presents favorable opportunities. While some investors may not wish to incorporate the gold-to-platinum ratio into their buying strategies, knowing this ratio benefits anyone wishing to learn more about platinum prices.
