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What is Platinum? Comparison with gold and silver

Published by Karl Martin Karus in category Precious metals on 30.06.2021
Gold price (XAU-SEK)
18 302,10 SEK/oz
  
+ 4,92 SEK
Silver price (XAG-SEK)
216,18 SEK/oz
  
+ 0,23 SEK

Gold and silver are precious metals known to all. Gold is known as a “portfolio protector” against economic risks and potential financial crashes from an investment perspective. Silver is better known as an industrial metal used to manufacture various technologies, medicine, renewable energy, etc. Platinum is also known as an industrial metal, but it is also widely used in jewelry making.

In this article, we compare gold, silver, and platinum. Write about Platinum’s features, usage, prices, and Platinum as an investment.

Gold, Silver, Platinum. What are the main differences?

Gold

The most popular precious metal on the market. Gold is known for its durability – it does not rust or corrode. Gold is also good heat and electrical conductivity. In industrial areas, it is most used in the electronic equipment and dental-medicine sectors. Naturally, one of the biggest uses of gold is in jewelry. However, gold is best known for investors as a financial risk diversifier and hedge to protect investments in times of economic instability.

  • Gold is considered a safe custodian of value.
  • In political crises and/or wars, gold has historically always been the financial instrument in which money is invested.
  • When stocks and real estate yields are negative, investors generally move their money to gold because gold retains its value and even grows in prices in such situations.

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Silver

Silver is more versatile. On the one hand, it resembles gold – a metal that holds value. On the other hand, silver plays a crucial role in the industrial sector. For that reason, the price of silver is also more volatile than that gold prices. In the event of a crisis, similarly to gold, assets are invested in silver.

  • Silver is used in batteries, superconductor applications, and microcircuitry.
  • Out of all the elements, silver is the best electric conductor and is actually used as the standard by which other conductors are measured. On a scale of 0 to 100, silver ranks 100 in terms of electrical conductivity. Copper ranks 97, and gold ranks 76. (1) This is one of the biggest reasons why the silver price is affected much more by industrial-sector economic health than gold.
  • Similar to gold, silver prices tend to rise when global financial markets fall.

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Platinum

Compared to gold or silver, Platinum is much more volatile than the aforementioned metals. This is mainly because Platinum is estimated to be around 3.5 times rarer than gold and is more difficult to extract. Platinum, like silver, is an industrial metal used extensively in the automotive, jewelry, and medical and electronics industries.

Where is it used?

Platinum has a huge demand from the car industry. Platinum is a key component in catalytic converters, which are used to reduce the harmfulness of emissions. This accounts for about 50% of platinum demand each year. (2)

After the auto industry, jewelry accounts for the majority of demand.

Platinum is also used in the chemicals industry as a catalyst for producing nitric acid, silicone, and benzene. The electronics industry uses platinum for computer hard disks and thermocouples. (2)

Where is it mined?

Platinum is found in its pure native form or platiniridium, a natural alloy of platinum and iridium. Platinum is present in thin sulfide layers in certain mafic igneous bodies and is mined in Canada, Russia, South Africa, the USA, Zimbabwe, and Australia. Some platinum is obtained as a by-product of copper and nickel processing. (3)

Most of the Platinum is mined in South Africa and Russia (around 75%).

Platinum as an investment  & what affects the prices

Platinum prices are much more volatile than gold and even silver. Platinum price movements are strongly in relation to the auto industry. Changes in car-making technologies etc. can strongly impact platinum prices.

Since around 75% of Platinum is mined in South Africa and Russia; one should be aware of the potential geopolitical issues, especially related to China and the USA, since the two are the biggest platinum buyers. Any geopolitical issues, tariffs, or trade restrictions could greatly impact platinum prices.

Because most of the platinum is mined in South Africa and Russia, there is great potential for cartel-like action that would support or even artificially rise platinum prices.

Platinum is not suitable for all investors because of its volatility. That said, Platinum (short: XPT) has made a significant rise over the last 18-months.

In 2020 March, the Platinum price was as low as $565, and in February 2021, the Platinum all-time high was registered at $1339, which is over 135% in ROI.

In conclusion, Platinum is the third most popular investment metal. It is much more volatile than gold and silver because of its rareness, mining locations, and car-industry influence on it. Platinum is a riskier investment then gold and silver, but it can also make better returns than the previously mentioned metals.

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(1)    https://tavex.se/en/10-interesting-facts-about-silver/

(2)    https://www.rsc.org/periodic-table/element/78/platinum

(3)    https://mineralseducationcoalition.org/elements/platinum/

 

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