Reasons to Invest in Platinum

Platinum is a very versatile metal and is has found its way into many industrial processes and products over the last few years, and is the only precious metal whose demand is mostly driven by industry not investor demand.

Some platinum is used for investment purposes, being fashioned into platinum coins and bars, to be held by investors, but this actually only represents a small percentage of the overall platinum produced.

When you add in the fact that the production of platinum is only a fraction of gold and silver, this means that the amount of platinum available each year for investment purposes is a pretty small amount indeed.

This can be seen as a good thing by investors, as it is the rarity of a metal that makes it so valuable, where the supply is so low that the demand for it can push the price up considerably. This is exactly what happens with platinum and while it is currently worth less than gold, it has spent most of the 21st century trading at an even higher price than gold has, peaking at over $2000 an ounce in 2008.

Platinum has lost half of that during the 10 years that have gone by since this peak, and this gives you an idea of how volatile platinum can be. 2008 was in the heat of the Great Recession, and it wasn’t long after platinum peaked that the stock market bottomed, which has more than tripled its levels over the 10 year period since that saw platinum drop by more than 50%.

This does not mean that platinum is always inversely correlated with the stock market, and sometimes both the stock market and the platinum market can move together, sometimes very significantly. People assume that they move separately and often they do, but sometimes they do not, and we should never just assume a relationship between assets without properly considering the market conditions of each at every given time.