Gold has been highly sought after both as a valuable investment and for its aesthetic qualities for a very long time. Platinum is another type of valuable metal that is utilized in the jewelry industry in addition to having applications in industry. Both stocks and real estate have the potential to be profitable investments; nevertheless, there are important distinctions to be made about their long-term stability and price volatility.
Gold vs. Platinum: What’s the Difference?
Platinum is mined at a rate of around 190 metric tons per year across the world. South Africa and Russia are the two countries responsible for the vast majority of the world’s platinum production.1
Platinum is more difficult to extract than gold because it is found at a greater depth in the soil and requires a purification procedure that is more challenging. It is a metal that is important for industrial uses, including catalytic converters for automobiles and turbine engines for aircraft. Despite its extremely high density, it is incredibly flexible. In addition to being used in jewelry, it is also utilized in medical devices such as pacemakers.
In 2019, 3,463 tons of gold were extracted from mines around the world. Three nations—China, Australia, and Russia—produce the majority of gold.2 It is utilized in a variety of fields, including dentistry, the manufacturing of computers and other electronic devices, the aerospace industry, and—by far and away—the artistic fields of jewelry making and other creative endeavors. Because of the perceived worth that gold holds as an alternative currency, numerous governments and private individuals hoard substantial amounts of the precious metal.
The price gap between gold and platinum is referred to as a “intercommodity spread.” Throughout the course of human history, there have been periods in which the price of gold has been higher than the price of platinum and vice versa.
From 1908 until September of 2008, platinum was often more expensive than gold. The price of gold has consistently been higher than the price of platinum since 2011.3 Platinum was trading at a price of $1,175 per ounce as of the 7th of June, 2021, while the price of gold was $1,897 per ounce.45
Platinum reached its all-time trading high of $2,182 per ounce on May 19, 2008, setting a record for the modern era.6
Identifiable Qualities and Attributes
Different trading characteristics apply to each type of metal. The market for gold is very liquid. On the global markets, buyers and sellers trade enormous volumes of gold each and every day. The COMEX subsidiary of CME Group in New York and the Tokyo Commodity Exchange are considered to be the two most important futures exchanges for the precious metal gold.
The gold futures contract traded on the COMEX exchange is one of the most liquid commodity futures in the world. The daily volume of this exchange is equivalent to around 27 million ounces of gold.7 In addition to being traded in physical marketplaces all over the world, gold is also traded on the over-the-counter market.
Platinum is traded on the futures markets in the United States at the New York Mercantile Exchange (NYMEX), which is a division of the CME Group, and in Tokyo at the Tokyo Commodity Exchange. Although platinum is traded in over-the-counter and physical markets as well, the volume of options trading is far lower than that of gold. Platinum is more sensitive to price increases than gold is because of the disparity in the two metals’ levels of liquidity.
The Relativity of Prices
Platinum and gold, along with the prices of other precious metals, have a tendency to move in the same direction. The difference in price between the two is a reflection of supply and demand as well as economic factors that affect the two metals independently. These factors include the significance of platinum in the automotive industry and the reputation of gold as a safe haven in times of economic instability.
Having a solid grasp of the intercommodity spread, or the difference in price between two different commodities, such as platinum and gold, can provide significant insight into the state of the current market. When there is a disparity in prices, there is frequently an opportunity to make money through trading or investment.
Which Is the Best Option for You?
If investing for the long term and having financial security are top priorities for you, then gold is most likely the greatest option for you. Demand for gold is virtually always present, albeit at varying degrees, and during times of economic instability, this demand only grows stronger. Platinum, on the other hand, has a propensity to be strongly associated with a flourishing economy and can see considerable shifts in popularity.
In light of the foregoing, platinum can be an excellent short-term investment that generates considerably better instant returns than gold. This is particularly true in the event that the economy is exhibiting an upward trend and the industrial and manufacturing industries are expanding.
It is essential to have a comprehensive understanding of your long-term investment objectives prior to making a decision regarding an investment in precious metals. Determine these first, then explore the various options available for your commodities to discover the one that works best.
How Can you Make an Investment in Gold or Platinum?
Buying gold or platinum in its physical form is one option to invest in these metals, and it’s likely the method with the fewest complications. The terms “bullion” and “bullion coins” refer to large quantities of precious metals such as gold, platinum, or silver. Coin merchants, brokerage businesses, precious metal dealers, and even certain banks provide their customers the opportunity to purchase bullion.
Collectible coins sometimes include precious metals like gold and platinum. The value of these coins extends beyond the material that they are made of and may come from their historical or aesthetic significance.
You have the option of purchasing stocks, mutual funds, or exchange-traded funds that invest in gold or platinum bullion if you do not wish to possess these metals in their physical form. These have a higher liquidity and do not need to be stored in a secure location.
The Crux of the Matter
Investors who want to diversify their holdings in the commodities market may find precious metals like platinum and gold to be appealing options. However, each precious metal comes with its own set of advantages, disadvantages, and market tendencies. When deciding between platinum and gold as an investment, it is common to base your decision on your long-term investment goals and your level of comfort with price changes. Perform adequate investigation before settling on a choice regarding your investment.
Questions That Are Typically Responded To (FAQs)
What exactly is the distinction between platinum and white gold?
White gold is not actually platinum; rather, it is a combination of several metals that is created to give the appearance of platinum. The ratio of gold to nickel and zinc in white gold is around 75:25.
What are some other investment opportunities besides purchasing physical gold and platinum?
You have the option of investing in businesses that are involved in the sector if you do not want to put your money directly into commodities such as gold and platinum. As an illustration, miners can offer some degree of exposure to the commodities that are mined by the companies.