Platinum is an alluring metal for investors and collectors, even if it is not as widely known as gold and silver. The metal has made waves due to its value, versatility in industrial uses, and its beauty.
Unlike gold, which has been mined and valued for countless generations, it was not until 1735 when platinum was discovered. The vast majority of global platinum comes from mines in South Africa, where workers often go through an arduous process to extract the shiny metal.
Usually found next to base metals like nickel and copper, platinum must be carefully refined and processed before it is considered pure. This process makes platinum mining an exclusive activity and gives the metal a high degree of rarity.
Investors eager to buy platinum online have a variety of options to choose from. Many retailers offer platinum coins, bars, and rounds prized across the world and are very liquid, even if much of the world’s platinum is not allocated to make bullion.
According to the Royal Mint, only about 2-11% of mined platinum is turned into bars and coins for investors and collectors to purchase. Nearly 40% is earmarked for the automotive industry. Some jewelry production also requires significant supplies of platinum.
Many are curious if platinum makes a good investment due to the metal’s rarity and importance in the automotive industry. More people ask about the best places to buy platinum online, especially as its spot price remains high.
The question about if platinum is a good investment in 2021 depends on a few factors. Keep reading for a better understanding of the metal and its prospects as an investment in the next year.
Bullish On Platinum In 2021?
Like silver, the state of global economies and industry plays a large role in the spot price of platinum. The metal is most widely used in automotive catalytic converters, within the computer industry, and in petroleum and chemical refining catalysts.
Since car sales and production numbers are a strong bellwether of the state of the auto industry, some think the push for cleaner vehicles could boost platinum’s spot price since demand for catalytic converters would increase. However, others point towards a shift by some carmakers towards recycled converters or ones made of palladium - suggesting demand for platinum might fall.
Some analysts believe platinum is due for a hefty price surge, regardless of the auto industry’s state, thanks to actions by leading central banks across the world.
In September 2020, U.S. Federal Reserve chairman Jerome Powell suggested interest rates would remain at zero for the next several years. Speculation is uncertainty would drive investors towards platinum as an alternative asset. Since platinum historically has traded at a premium to gold, hopes are the metal will close the gap with gold and give steady investors a great return.
The Shift From Palladium To Platinum And How It Affects Markets
Palladium and platinum historically traded close in spot price - but palladium has enjoyed a surge in the last few years. Global under-supply of the metal sent palladium prices far beyond platinum, which has struggled since 2016 to overcome oversupply.
As companies shift towards platinum instead of palladium to save money, some analysts believe platinum could rise in price.
This effect would be magnified if power outages in South Africa stopped disrupting output for leading palladium producers. Sustained mining would lead to a steady decline in palladium prices. Still, others claim the process to swap out palladium with platinum is a technically complex procedure that some companies would choose not to do.
Bullish Or Bearish On Platinum In 2021?
Platinum investors have plenty to think about in the next year. Hopes are that a resurgent automotive industry could drive up the metal’s price and help it close the gap with gold. Others worry that palladium will still reign supreme in industrial uses and leave platinum struggling to rise in value.
Investors willing to take a chance on historical trends that tie platinum gold close together in price would be prudent to invest in platinum during the next year.
Those who are bullish on the future of electric cars and the gradual shift away from ‘traditional’ automobiles (who use catalytic converters), might be wise to stick with another type of bullion to add to their portfolio. Overall, deciding to open a platinum investment in a portfolio depends on an investor’s personal preferences and comfort with the market.