The precious metals market can be a daunting place to enter as an investor, and for those who do, the investment options are usually gold or silver. Recently, however, more people have been turning to another precious metal: platinum. Compared to gold and silver, platinum is much rarer, making it extremely valuable. Though much of the metal’s use has been concentrated on industrial processes and products, platinum is slowly becoming a strong investment contender, so much so that it is now the third most traded precious metal.
Though there are undeniable benefits to investing in gold, many are unaware of the unique opportunities you can get from investing in platinum. High demand and low supply have caused the platinum market to go into a deficit, making prices go up. If you are new to the precious metals market or looking for something to add to your investment portfolio, you should consider investing in this metal. If you are interested, you can find in physical form, which is one of the best ways to invest in the metal.
Platinum Market Dynamics
As an investor, you naturally have to be aware of how the platinum market operates to invest in the metal. South Africa is the top producer of platinum, accounting for 75% of the production in the world. Thus, political, economic, and environmental conditions can affect the market and supply at a given time. When supply is reduced, the market equalises by increasing the price of the metal to match the current supply.
Over time, the demand for platinum has stably grown due to the increasing interest from investors. Given that platinum has long been used for industrial purposes, the additional demand may affect the prices of the metal in the market. However, changes in the automotive industry can also cause demand to decrease if more people shift to electric cars since catalytic converters will no longer be needed.
Platinum is so versatile that it can still be used in so many other processes that can drive its demand. You can find in the form of jewellery, bullion, coins, and others. As with other precious metals, however, you can expect volatility in some circumstances. Prices may suddenly drop or rise at any time, but knowing the market conditions can help you observe or predict price trends.
Platinum as an Investment
Investing in platinum is not completely risk-free, especially with the volatility in price. However, knowing the right times to invest may help with capital accumulation or as an inflation hedge. Given that there are several market drivers, it can be challenging to make investment decisions with platinum. Thus, it is always recommended to assess the performance of the market and the outlook for platinum to know if it is headed in a positive direction. As with other investments, there will always be some risk involved, so managing that wisely is crucial.
There are a number of ways in which you can invest in platinum, though physical bars, bullions, or coins are usually the most advisable since they are tangible. If you prefer something more flexible, you can also look into exchange-traded funds or investing in shares of a mining company. Choosing the latter option may give you some leeway if you find a successful company as you may not be severely affected by drops in platinum price.
Author Bio: Julian Carter is a farmer of words in the field of creativity. She is an experienced independent content writer with a demonstrated history of working in the writing and editing industry. She is a multi-niche content chef who loves cooking new things.