Platinum is a precious metal with automotive and industrial uses that can be made into jewelry and prized by investors. There is also a serious deficit in the amount of platinum available, which led analysts to predict that prices will climb through this year and into the next. But is platinum investing right for you? […]
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Platinum is a precious metal with automotive and industrial uses that can be made into jewelry and prized by investors. There is also a serious deficit in the amount of platinum available, which led analysts to predict that prices will climb through this year and into the next.
But is platinum investing right for you? Keep reading as we explore the market, its pros and cons, and what you should consider before purchasing.
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Investing in platinum is similar to investing in other precious metals such as gold and silver. You can buy physical platinum in coins, bars, and rounds to keep yourself or hold in an IRA or purchase platinum stocks. These may be funds holding physical platinum or platinum mining companies’ shares.
While platinum is expected to increase in value over the next year—from a current price of around $900 per ounce in March 2024 to $1,200 per ounce by 2025—precious metals are usually best as long-term investments. Their prices can be volatile and fluctuate rapidly in the short term, although they typically maintain or gain value over time.
In some ways, platinum investing is like buying stocks, bonds, or other investments. You should keep all these basics in mind:
In the case of platinum, there are some additional factors to consider, especially if you plan to purchase physical metal.
Coins and bars must be stored securely to avoid the risk of theft. If you keep them at home, you will likely need to pay higher insurance premiums for coverage through your homeowner policy. Secure storage options, such as depositories, include insurance coverage, but you’ll need to pay a monthly fee to keep your platinum there.
Then, when you want to convert your investment to cash, it is more involved than taking a withdrawal from the bank. Instead, you need to find a buyer and transfer possession of your platinum.
Given platinum’s industrial and investment value, it may not be hard to find a buyer, but the sales process involves additional steps that you might not have with other assets.
Once you are ready to buy platinum, you have several options available. These include buying physical platinum, stocks that derive value from platinum and platinum futures or options.
Precious metals investment option | Best for |
Buy platinum from a dealer | Taking possession of physical platinum |
Open a platinum IRA | Retirement savings and a tax break |
Purchase platinum ETFs | Those who don’t want to store physical platinum |
Purchase mining stocks | Benefiting from the metal industry as a whole |
Invest in platinum futures or options | Advanced investors with a high risk tolerance |
If you are interested in having access to physical platinum at your home, then buying from a dealer is the option for you.
Buying platinum from a dealer is similar to any other retail transaction. There may be local precious metals dealers where you can buy platinum on-site and take it home. Or you could purchase from an online dealer and have your purchase shipped.
Since platinum prices are constantly changing, dealers rarely list their prices online. However, many do have their inventory available for review. To complete the transaction, be prepared to speak to a representative on the phone.
Platinum can be used to boost your retirement savings if you hold your precious metals in an IRA. However, you’ll have to follow IRS rules to do so.
The IRS allows precious metals such as platinum to be held in self-directed IRAs. These retirement plans require a custodian to administer the account and platinum to be stored in an IRS-approved depository.
Depending on how your IRA is set up, you may get a tax deduction for contributions or tax-free withdrawals in retirement.
Only platinum that is 99.95% pure is eligible to be held in a precious metals IRA. What’s more, bars, rounds, and coins must be produced by an accredited or certified manufacturer or a national government mint.
If you like the idea of investing in platinum but are not thrilled about storing it, an ETF could be a solution.
An ETF is an exchange-traded fund that can be bought and sold like stocks and mutual funds. Several platinum ETFs are available, and these are funds that hold physical platinum and derive their value from the metal.
There are relatively few North American ETFs available. GraniteShares Platinum Trust, Sprott Physical Platinum and Palladium Trust, and Physical Platinum Shares ETF are all options.
Mining stocks appeal to those who want to benefit from platinum but aren’t sure about putting their money in the metal itself.
When you buy mining stocks, you purchase a share of the company. That means the value of your investment isn’t tied directly to the price of platinum but rather to the company’s strength.
Mining companies may extract different precious metals, but some specialize in platinum. Anglo American Platinum and Impala Platinum Holdings are two publicly traded companies to consider.
Platinum futures and options are best for experienced investors who are comfortable with the risks they entail.
With a platinum future, an investor is committing to making a purchase in the future at a fixed price. Options may include the right to purchase but not the obligation.
Futures and options are complex investments and shouldn’t be undertaken by anyone who doesn’t fully understand the risks and costs involved. Work with an investment advisor to learn more about platinum futures and options.
Ask the expert
I’m not a big fan of investing in the physical commodity due to the general hassle—especially in an IRA when it comes time to take your required minimum distributions. I think it is fine to make small gifts to loved ones as a wedding gift, for example, but beyond that, I don’t advise the physical commodity. ETFs are a great way to get exposure to platinum and other commodities. They are liquid and easy to get into and out of. I would leave the futures and options to institutional investing pros.
If you’d like to buy platinum, follow these steps:
If you’re interested in commodity exposure, platinum, or other commodities, I would discuss your options with your financial advisor, who will develop solutions by considering your long-term goals, time horizon, and risk tolerance.
Platinum isn’t right for everyone, and you should consider your personal preferences and investing goals when deciding whether to purchase this precious metal.
Here are some questions to ask yourself:
To sum it all up, here’s a final overview of the pros and cons of platinum investing.
Pros
Rare metal that is valued for both industrial uses and as an investment.
Analysts predict platinum prices will rise through 2025.
Precious metals such as platinum are tangible assets that aren’t tied to any country’s currency and may serve as a hedge against inflation.
Cons
Owning physical platinum requires secure storage and possibly additional insurance costs.
Fewer platinum products are available as compared to gold and silver.
Platinum products can be counterfeited, and investors must be cautious when purchasing.
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