Learn How to Compare Gold and Platinum Before Investing
Gold is a longtime investment staple, but recently, platinum has been making waves. Both metals are rare, have intrinsic value, and are used in many industries, affecting supply, demand, and price. But which one is more valuable to invest in for the long term?
Platinum is Naturally Rarer Than Gold
Platinum only makes up about 0.005% of the Earth’s crust. Gold, on the other hand, is 20% more abundant. However, platinum isn’t mined as much as gold due to the complex extraction process. This makes platinum rarer and more difficult to obtain, increasing its value and price. It can also create fluctuations in the market depending on the geopolitical climate where platinum is found, such as South Africa, Canada, and Russia.
Which Metal Has More Intrinsic Value?
Platinum can be more valuable than gold due to its intrinsic value in the motor industry, which creates a more stable demand for it. Gold’s intrinsic value lies in the currency and jewelry industries, and more people are likely to invest in gold than platinum solely due to its wider availability and affordability. However, the market for both precious metals changes daily, and it’s impossible to say which is more intrinsically valuable.
Which Metal Has the Lower Spot Price?
As you can see, the spot prices of platinum and gold have fluctuated dramatically over the years. In 2008, platinum dramatically peaked and dropped in value while gold continued to climb gradually. From 2022 through 2024, platinum was largely stable at around $1,000 at spot. Comparatively, gold went from $1,500 to $2,500 during the same period.
While platinum has been less expensive in recent years, and the market is more volatile, precious metal experts believe it has the potential to yield higher returns in the long run. Compared to gold prices, platinum tends to have sudden highs and lows, while gold prices tend to have slow, gradual highs and lows.
While the spot price for platinum may be higher than gold by the time you’re reading this, it could dramatically change any day, which makes when to purchase platinum especially tricky. Therefore, it is not a matter of which precious metal has the lower spot price, but when one has the lower spot price than the other. Keep an eye on our spot price charts to help ensure you’re buying at the right time!
Which Metal Has the Lower Premium?
Understanding the premiums on precious metals is one of the most important parts of investing in gold and silver. The premium is the additional cost that accounts for the expense of fabricating and distributing the product. Premiums vary from product to product based on multiple factors: production costs, rarity, market demand, design, market conditions, and historical significance. The rarer and more sought-after the coin, the higher the premium will be. For more common products such as American Eagles, the premium on a random year gold 1 oz coin is, currently, at the time of writing this, $124.99. In contrast, a platinum coin equivalent’s premium is $199.99.
To calculate the premium on a product, subtract the current spot price from the current list price for a single quantity of the product. This way, you can easily compare the premiums on the gold and platinum versions of the item you’ve got your eye on.
What Influences the Gold and Platinum Markets?
We’ve mentioned the market fluctuations quite a few times throughout this article, but let’s break down what causes these changes so that you have a better understanding of how they happen and what to do when the market shifts suddenly.
There are a few leading causes for a shift in the precious metals market:
- Economic conditions
- Government policies
- Supply and demand
One of the most recent examples of how an economic crisis influences the precious metals market is the COVID-19 pandemic. While the globe shut down many non-essential businesses and many people received government funds to keep them afloat, gold and silver prices skyrocketed. During geopolitical tension, such as when the South African miners went on strike in 1946 or when the threat of war looms, precious metals tend to increase prices.
In 2019, the Bank of International Settlements classified gold as a Tier One Asset, which is considered a zero-risk asset. This reclassification has led to increased demand from investors and financial institutions alike. Government policy changes like this can have significant effects on the market.
Precious metals are considered rare, one of the main drivers of their value. If a new source for any of them is found, supply and demand would increase. Conversely, if an existing mine is no longer able to function due to external factors, that would also influence the balance of supply and demand.
When shopping for precious metals to add to your portfolio, don’t forget to consider these critical factors. It’s a good idea to stay updated on international news and subscribe to precious metal brand newsletters to be notified of a sudden change because that may make or break your buying decision.
Identify Which Metal Is Better for You
Here is an overview of the differences between gold and platinum so you can compare both materials and determine which is better for you.
Gold:
- Liquidity: One of the largest trading commodities in the world.
- Sustainability: More stable price fluctuations.
- Alternative currency: Yes.
- Liquidity: A low trading amount.
- Sustainability: Price fluctuations due to lower trading amount, production difficulty, and rarity.
- Alternative currency: No.
Platinum offers more value if you are looking for a rare material, but gold is more profitable as it comes in more significant amounts. Your choice between gold and platinum will depend on your unique portfolio and the item you want to invest in.
Considering all of these factors, it’s essential to consider what you, as a buyer, are willing to risk when purchasing either precious metal. Platinum may have a better resale value in the future, but gold is a tried-and-true investment that people have relied on for thousands of years.
Good luck with your investments, and remember, we’re happy to assist you with any questions you may have on making your decision!
