Platinum Vs. Gold Investments
How Do These Investments Compare?
Gold has long been a popular tangible investment. Platinum is another precious metal that's used in jewelry and has industrial applications. Which of these is the better investment?
Learn more about platinum and gold and how to get started investing in one or both.
What Is Platinum?
About 190 metric tons of platinum are mined each year globally. The majority of platinum production comes from two countries: South Africa and Russia.
Platinum is more difficult to produce than gold as it's buried deeper in the earth than gold and requires a more difficult process to purify.
Platinum is a very dense but incredibly malleable metal. It has important industrial applications, including catalytic converters for cars and turbine engines for planes. It's also used in medical devices like pacemakers and in jewelry.
What Is Gold?
In 2019, 3,463 tons of gold were mined globally. Gold is mainly produced in three countries, China, Australia, and Russia.
Gold is used in several industries, including dentistry, computers and other electronic devices, in the aerospace industry, and, most commonly, in jewelry and other artistic applications. Many governments and individuals store quantities of gold because of its perceived value as an alternative currency.
Platinum vs. Gold Investments
|Price as of April 3, 2021||$1,214 per ounce||$1,730 per ounce|
|Volume as of April 3, 2021||10,741||166,688|
|Futures Exchanges||CME Group and the Tokyo Commodity Exchange||CME Group and the Tokyo Commodity Exchange|
Here are factors to consider when it comes to investing in gold versus platinum.
The price differential between gold and platinum is an intercommodity spread. Over the course of history, there have been times when gold has traded at a premium to platinum and vice versa.
Platinum usually traded at a higher price than gold from 1987 until September 2008. Since 2011, the price of gold has exceeded the price of platinum. As of April 3, 2021, gold was trading at $1,730 an ounce compared with $1,214 an ounce for platinum.
On May 19, 2008, platinum traded to a modern-day high of $2,182 per ounce.
Characteristics and Features
Each metal has different trading characteristics. Gold is an extremely liquid market. Each day, buyers and sellers trade huge volumes of gold on world markets. The two most important futures exchanges for gold are the COMEX division of CME Group in New York and the Tokyo Commodity Exchange.
The COMEX gold futures contract is one of the most liquid commodity futures in the world; its daily trading volume represents about 27 million ounces of gold. Gold also trades on the over-the-counter market as well as in physical markets around the world.
The most important futures exchanges for platinum are the NYMEX division of CME Group in New York and the Tokyo Commodity Exchange. Platinum also trades in over-the-counter and physical markets. Its options trading volume is much smaller compared with gold. Because of the difference in liquidity, platinum is more susceptible to price spikes than gold is.
Platinum and gold tend to move in the same direction, along with other precious metals. The price differential between the two represents supply and demand and economic issues that affect the two metals independently, including platinum's importance in the automobile industry and gold's status as a refuge during economic downturns.
Understanding the price of platinum relative to the price of gold—the intercommodity spread—can yield important clues as to current market sentiment. When divergences occur, profitable trading or investing opportunities often arise.
How Do I Invest in Platinum or Gold?
Perhaps the most straightforward way to invest in gold or platinum is to buy the physical metals. Bullion and bullion coins are bulk quantities of platinum, gold, or other precious metals. You can buy bullion from coin dealers, brokerage firms, precious metal dealers, and some banks.
Gold and platinum can also be found in collectible coins. These coins have value beyond the metal they're made of and may have historic or aesthetic value.
If you don't want to own these metals physically, you can buy stocks, mutual funds, and ETFs that invest in gold or platinum bullion. These offer more liquidity and don't require secure storage.
The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.