Investing Decisions: Should I Put My Money in Platinum or Gold?

Investing Decisions: Should I Put My Money in Platinum or Gold?

The decision comes down to whether one’s investment goals are short-term or long-term.

Gold has been highly sought after both as a valuable investment and for its aesthetic qualities for a very long time. In addition to having applications in the industry, platinum is another type of valuable metal that is utilized in the jewelry industry. Both stocks and real estate have the potential to be profitable investments. Still, there are important differences between how stable they are over the long term and how much their prices change.

What sets gold apart from platinum, and what are their similarities?

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. 

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. It is also used in medical devices, such as pacemakers, as well as in jewelry.

In 2019, 3,463 tons of gold were extracted from mines around the world. China, Australia, and Russia are the primary nations responsible for the production of gold. 2. It is employed in a variety of fields, such as dentistry, the manufacturing of computers and other electronic equipment, the aerospace sector, and—by far and away—the majority of the time in the field of jewelry making and other artistic applications. Because of the perceived value that gold holds as an alternative currency, numerous governments and private individuals hoard substantial amounts of precious metal. 

Platinum Gold
Liquidity Much lower trading volume One of the highest-volume commodity trading markets in the world
Long-Term Reliability More susceptible to price swings due to lower liquidity, scarcity, difficulty of mining and production, and ties to the auto industry Price fluctuates, but more stable over time due to its place as a refuge during downturns
Alternative Currency No Yes
Applications Industrial, auto and airplane manufacturing, jewelry, medical Dentistry, computers and electronics, aerospace, jewelry, the arts
Price as of June 7, 2021 $1,175 per ounce $1,897 per ounce
Volume as of June 7, 2021 9,171 118,913
Futures Exchanges CME Group and the Tokyo Commodity Exchange CME Group and the Tokyo Commodity Exchange

When deciding between investing in gold or platinum, the following are some important considerations to keep in mind.

Price

An “inter-commodity spread” refers to the price difference between two separate commodities, such as gold and platinum. 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 1987 up to September 2008, the price of platinum was consistently greater than the price of gold. The price of gold has consistently been higher than the price of platinum since 2011. 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.

Qualities and Identifiable Qualities

Different trading characteristics are associated with each type of metal. The market for gold is exceptionally liquid. In the global markets, buyers and sellers trade enormous volumes of gold each and every day. People think that the two most important futures exchanges for gold are the COMEX subsidiary of CME Group in New York and the Tokyo Commodity Exchange.

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.

In addition to being traded at physical marketplaces all over the world, gold is also traded via an 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 in platinum is far lower than that of gold. Because the two metals are not as liquid as each other, platinum is more sensitive to price increases than gold is.

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. Among these are the importance of platinum in the auto industry and the fact that gold is known as a safe haven when the economy is unstable.

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 best 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, is often strongly linked to an economy that is doing well, and its popularity can change a lot.

In light of the foregoing, platinum can be an excellent short-term investment that generates considerably better instant returns than gold. This is especially true when the economy is getting better and the industrial and manufacturing industries are growing.

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. First, figure out these things, and then look into the different options for your goods to find the one that works best.

How do I go about investing 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. Certain coin merchants, brokerage businesses, precious metal dealers, and even certain banks provide their customers the opportunity to purchase bullion.

Collectible coins sometimes even contain precious metals like gold or 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 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 opportunities in precious metals such as platinum and gold appealing. However, these metals each have their own set of advantages, disadvantages, and patterns in the market. 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 Asked (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 are created to give the appearance of platinum. White gold is made up of 75 percent gold, 25 percent nickel, and 25 percent zinc.

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.

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