Precious Metals
Investing in Platinum
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Summary
Platinum metals, including Palladium, Ruthenium, Osmium, Iridium, and Rhodium have become the rarest metals in the world today, yet they are essential in the manufacturing production in the jewelry, electronics, automobile, petroleum refining, chemical, and pharmaceutical industries. Although, investors have generally focused on gold and silver to diversify their investment portfolios, there are several reasons to consider adding Platinum to enhance portfolio performance even further.There are two main factors influencing platinum price appreciation:
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1. Scarcity
Platinum is 15 times more rare than gold. All the platinum ever mined, for example, would fit into a 25-cubic-foot room. It takes roughly 10 tons of mined raw ore to produce just one pure ounce of platinum. South Africa and Russia, which are responsible for producing nearly 90% of the world's platinum, are very politically and economically unstable. Any disruption from one of these two primary sources of supply would be a catalyst to propel the price of platinum much higher. Unlike gold and silver, there is no significant stockpile of platinum to meet demand, if a serious supply situation were to occur. The platinum market has been in supply deficit for several years, and is expected to continue for some time. Thus, if "precious" is measured in terms of scarcity, platinum is the most precious metal of all.
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2. Growing Demand
Platinum demand has increased an average of 5-8% per year throughout the 1990's and well into the 2000's. Of the approximately five million ounces of platinum that are used each year, the two main usage groups are jewelry fabrication and catalytic converters used in automobiles.
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