When the economy took a plunge from 2008-2009 nearly all markets were hit hard. Notoriously volatile platinum prices suffered a severe drop, falling from an all-time high of about $2300 per ounce in March of 2008 to a low of about $760 in October of 2008. However, since the drop, platinum prices have been creeping up steadily and investors are claiming that the prices will continue to climb.
Platinum is an appealing precious metal investment because of its dependable and growing demand. It is an essential metal in the production of approximately 20% of all consumer products. In fact, the special properties of platinum, including its durability, resistance to corrosion, superior electric conductivity and heat-resistance, are what make it so integral to industry production. The automobile industry, for example, uses over 1/3 of all of the international platinum supply manufacture catalytic converters that are more environmentally friendly. More stringent emissions standards throughout the world are said to increase, in turn boosting the industry’s reliance on platinum in emissions control converters and oxygen sensors.
Some other goods manufactured from platinum include hard disk drives, anti-cancer drugs, fiber-optic cables, LCD displays, paints, pacemakers, and hydrogen fuel cells. These hydrogen fuel cells are dependant on platinum as a catalyst to combine oxygen and hydrogen, and produce water and electricity in a more environmentally friendly way.
In addition to its industrial application, platinum is also widely used in fine jewelry. In fact, platinum is the rarest of all precious metals, with a higher price than gold. About 90% of all international platinum supplies are mined in South Africa and Russia. Not only are there few mines, but the platinum mining process is also quite long. In order to produce just one ounce of pure platinum, about 8 tons of raw ore must be mined. Despite its short supply, platinum’s demand is only growing in the jewelry industry. Platinum’s strength, beautiful white-sheen and hypoallergenic properties have made platinum rings and platinum set diamond jewelry extremely popular.
With such a high and reliable demand, and such a low supply, many investors believe that platinum will continue to increase in price. It is not only a stable long-term investment in times of general economic sluggishness, but it has also made notable long-term gains since the year 2000.
If you are interested in making platinum investments, there are several ways to go about it:
Coins or Bars: The simplest, safest way is to buy platinum bullion coins or bullion bars. Coins are easier to store, and if you have a small number of coins they can be stored at home. If you are buying bars, or a high number of coins, you may want to consider investing in a safe deposit box. This is a good option for small investors who are looking for a low-risk option.
Mining Stocks: You can buy stocks in platinum mining companies. However, this is considered a far riskier investment than investing in the metal itself. Your investment then depends on company management, employee productivity, and local political or environmental circumstances.
ETFs or Mutual Funds: ETFs and mutual funds are considered to be a good short term investment. However, due to the fact that they require middle-men, they can be expensive for long-term investors. Note: most ETFs and mutual funds offer investments in gold, silver, or all precious metals. It may be difficult to find a platinum-only investment option.
Perth Certificates: The Perth Mint Certificate Program, also known as PMCP, is a government-backed certificate that can be bought by investors. The Perth Mint is owned by the Government of Western Australia and has been providing investors with storage and trading facilities for precious metals since 1899. Investors who buy PMCPs can own platinum in unallocated or allocated accounts. Because there are barely any extra fees, and because the certificates are easy to liquidate, the PMCP is considered a very safe and efficient way to invest in platinum bullion.
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