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Platinum vs. Gold as an Investment and a Background on Platinum

Platinum is revered both for its beauty and its industrial properties. It represents a speculative investment, but platinum's unique supply and demand fundamentals have the potential to drive some spectacular returns.

Platinum has the element symbol Pt, atomic number 78, its atomic weight is 195.09, and most platinum is weighed in troy ounces. The etymology of the word platinum is derived from the Spanish name 'platina' meaning "little silver." Platinum was discovered by the Spanish Naval Officer and scientist Antonio de Ulloa.

Many investors who watch the market closely are surprised to find platinum is even more rare than gold. In fact, platinum is so rare that all of the platinum ever mined could fit into a storage room measuring 25 feet by 25 feet. This super-dense precious metal is more than twenty times more rare than gold.

Despite scarce supply, and perceived rarity, platinum stock prices and everything related recently fell below the gold stock price with fewer investments, an anomaly seldom seen in the past several decades.

Gold's rise versus platinum is primarily due to its rediscovered use as a monetary metal and safe-haven asset during these inflationary times. But like gold, platinum is a tangible asset that can be purchased and owned in the form of bullion coins or bullion bars.

Perhaps, in the short run, investors underestimate the white metal's wealth-preserving attributes. The Chinese refer to platinum as “white gold” and it is used in fine jewelry. A single bar of platinum may cost significant funds, but the return shares for the long-term are typically higher than the initial buy-in.

Investing in platinum offers a huge upside in purchase potential.

Historically speaking, platinum has generally sold for around twice the spot price of gold stocks. As recently as May 2008, platinum was 2.4 times the price of the yellow metal commodity before the financial collapse took both metals down. Since then, platinum has lagged. Don't expect this period of trade underperformance to last forever.

Platinum is likely to outperform should any of the following occur:

  • Worldwide demand for gas-engine or diesel-engine automobile industries increases substantially
  • Further disruption in platinum mine production, refiners, and trade (particularly in troubled South Africa)
  • Investors seeking wealth preservation discover platinum as a "go-to" asset, on par with gold and silver commodities

With an overwhelming percentage of demand coming from the industrial sector - especially for platinum’s uses in catalytic converters in automobiles - platinum is a more speculative investment than either gold or silver products. Investors should be prepared for more volatility, both to the upside and the downside. But those who can hang on for the ride may be richly rewarded if bought while on sale.

Platinum coins and bars are available through the US Mint, the British Royal Mint, the Australian Perth Mint, and the Royal Canadian Mint.

Some of the choice mint coins include the American Platinum Eagles, the British Royal Mint Platinum Brittania, the Australian Perth Mint Platinum Kangaroos, and the Canadian Platinum Maple Leafs.

Find out where to buy gold bars. Money Metals Exchange's company site offers plenty of options to find the product you need and secure shipping to get it to you.

In addition, there are a number of options for adding precious metals to your individual retirement account, i.e. IRA., providing you with the security, experience, and information you need to make the best decision as an investor.

Platinum is a great store of value and has historically maintained a solid performance for dealers, collectors, and customers alike. We have plenty of reviews for reference to assist a customer seeking the benefits of platinum.

Invest in Platinum? The Bullish Case for Platinum Coins or Platinum Bars

Scarce platinum has always been extraordinarily difficult to find. Now it is getting exceptionally difficult to extract, for a variety of reasons, once a deposit is located. Nearly three-quarters of the world's supply of platinum metal content comes from a single country - South Africa.

Platinum Bars / Coins

The ongoing violence, labor disputes, infringed property rights, and power outages in South African mines periodically disrupt production. It is not hard to imagine even more severe problems, as history has demonstrated, creating a serious shortage and immediate spot price spike.

The events of early 2008 were likely a prelude: massive electrical blackouts shut down production at many of the country's mines. Furthermore, rumors about a potential move by the South African government to nationalize all mines have dissuaded international mining companies from either opening or expanding production in the country.

On the demand front, platinum's prospects are also bright. Despite the economic slowdown in many parts of the Western world, the future outlook for auto demand (and thus the demand for platinum) remains very strong thanks to a rising middle class in both China and India - where nearly 40% of the world's population resides!

Things may change caused by interference with the Bloc countries and their option to change currency or trade dollar backing, but there is no question that these countries still have a significant amount of precious metals, including gold, silver, palladium, and platinum.

According to the United States Mint, the one-ounce American Eagle platinum coin displays the highest face value, i.e. one hundred dollars (USD $100), ever to appear on a U.S. coin. All American Eagle Coins are legal tender coins.

Although their face value is largely symbolic, it provides proof of their authenticity as official U.S. coinage that collectors find confidence in. The platinum $100 coin, with a purity of .9995, began in 1997 and continues to be produced and sold today. Just do not be sticker-shocked when you find out the US government is selling a $100 face-value coin for more than $100.

The downside risk to owning platinum coins - compared to gold coins - is currently somewhat mitigated because the metal has already seen a major drop in value relative to gold. Investors comfortable with platinum's more speculative nature should consider diversifying a portion of their precious metals portfolio. The metal's risk versus reward profile has rarely looked better.

Stefan Gleason

About the Author:

Stefan Gleason is President of Money Metals Exchange, the company recently named "Best Overall Online Precious Metals Dealer" by Investopedia. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC and in hundreds of publications such as the Wall Street Journal, TheStreet, and Seeking Alpha.