Gold vs. Platinum: Which Is the Right Investment for You?

Gold vs. Platinum: Which Is the Right Investment for You?

While many investors know about investing in gold and silver, most probably don’t know that there are other precious metals in which they can invest. One of the most common precious metals aside from gold and silver is platinum, which has a long history of use in jewelry.

Many investors may think that platinum is more expensive than gold, which it was for many years. But changes in the industrial demand for platinum have meant that the platinum price has fallen in recent years. That could make it a good investment opportunity for investors who think that it will regain value in the future. But before investing in gold or platinum, investors should do their homework.

The Value of Platinum

Platinum’s primary uses are in industry and in jewelry. Many people may be familiar with platinum’s use in rings, particularly wedding bands. But platinum in an industrial context is used to construct catalytic converters, the primary industrial use for platinum.

Because of platinum’s anti-corrosive qualities, it, along with palladium, is used in automobile catalytic converters. It is also heavily used in electronics and dentistry. About 35% of current platinum demand comes from the automotive industry, 20-25% each comes from jewelry demand and other industrial demand, and about 15% comes from investment demand.

Platinum’s production is also highly concentrated. About 75% of world platinum supply comes from South Africa, with Russia, the United States, and Canada contributing much of the rest. That leaves platinum exposed to potential supply shocks.

Recently, platinum’s price has decreased to the point that it is significantly less expensive than gold. That’s a result of falling demand for platinum in catalytic converters. Many automakers had switched from platinum to the cheaper palladium. But with palladium now rising significantly in price, many automakers may once again be thinking about switching back to platinum, which could boost the platinum price in the future. For those wondering whether a platinum vs. gold investment is better, that potential future price growth could factor into an investment decision.

The Value of Gold

Gold has served as money for millennia, but the era of the classical gold standard that existed from 1870 to 1914 was its real golden era. Since that time, and especially from the 1930s onward, gold formed the bedrock of the global monetary system even when it was difficult or impossible for ordinary Americans to invest in it.

With the closing of the gold window in 1971, followed by the legalization of gold ownership in 1975, gold investment in the US has really taken off. Rather than being fixed by government fiat, the gold price now fluctuates according to market supply and demand.

Gold mining is energy intensive and expensive, but mine production does contribute a small amount to the total world gold supply each year. Recycling gold from used electronics also contributes to the gold supply, which is crucial for a metal that is in demand not only from investors but also from industry.

But industrial demand is not the primary factor affecting overall gold demand. The majority of gold demand comes from the investment sector and from jewelers, with significant overlap between the two. In countries such as India and China, gold jewelry is a popular investment choice, whereas in the West, investors generally prefer to invest in gold bars or gold coins.

New financial products such as exchange-traded funds (ETFs) also affect gold demand, as these new funds have to purchase and hold gold in order to back the shares they sell to investors. And as the world economy teeters on the brink of recession, investor demand for gold looks set to increase significantly in the coming years, which should send the gold price soaring.

The Differences in Gold vs. Platinum

Gold is by far the rarest of the major precious metals, far less common in the earth’s crust than silver, platinum, or palladium. But because so many people look for gold, its production is far greater than platinum’s. Annual production of platinum is normally under 200 tonnes, meaning that it is produced in far smaller quantities than the other precious metals. Platinum’s production is also highly concentrated in South Africa and, in the event of disruption to the South African mining sector, platinum prices would likely skyrocket.

Investors looking for long-term stability have long sought to invest in gold, as gold offers both stability as well as long-term price appreciation. Developments in platinum demand have led platinum’s price to drop significantly in recent years, although it still remains far higher than it was at the beginning of the century. And for those investors who believe that platinum’s price will rebound back to where it once was, a platinum vs. gold investment can offer some pretty significant price appreciation potential.

How to Decide if Gold or Platinum is Right for You?

Deciding on a platinum vs. gold investment is ultimately a personal decision, but it’s one that should be an informed decision. Some of the questions you might ask yourself about a platinum vs. gold investment include:

  • How long do I expect to own precious metals?
  • When do I expect to start taking distributions from my retirement accounts?
  • Do I favor long-term stability or long-term growth?
  • How will I invest in gold or platinum?

Depending on what forms of gold and platinum you plan to invest in and what investment vehicles you plan to use, you may find that influences your investment decisions and strategy. And before investing in gold or platinum, be sure to do as much research as you can.

Ways to Invest in Gold or Platinum

Just like gold and silver, platinum offers many of the same investment methods.

1. Coins and Bars

Platinum doesn’t have quite the history of coinage that gold does, but it’s still the third-most popular precious metal for coins and bars. Investors can find numerous options to suit their investment needs.

2. Jewelry

Platinum jewelry has long been more expensive that gold jewelry, as platinum was always more expensive than gold. But even with platinum’s price decreasing, the premiums paid versus the metal content of gold or platinum jewelry make jewelry a less than ideal investment asset.

3. ETFs

Exchange-traded funds (ETFs) have become much more popular in recent years as investment vehicles for those looking to trade in commodities, including precious metals. But they’re not the best idea for those looking for a gold or platinum investment.

4. Gold or Platinum IRA

Investors can also invest in gold or platinum through a gold IRA or platinum IRA. That allows them the same tax-advantaged status as conventional IRAs. Investors can even roll over assets from existing retirement accounts into a gold or platinum IRA.

Get Expert Advice for Your Next Gold or Platinum Investment

If precious metals are the right investment for you, there’s no better time to start a gold or platinum investment than today. Whether you’re interested in investing in gold or silver or platinum, the experts at Goldco can help you with your research and walk you through the process of investment once you’ve made your decision.

With years of experience assisting investors in their precious metals investments, Goldco can help you make the right choices for your retirement savings. Learn more about your precious metals investment options by contacting Goldco today.

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