Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
Platinum, a precious metal that has captivated investors and collectors alike, has unique properties and a market that’s distinctly different from gold and silver. Whether you’re a seasoned investor or considering your first purchase of precious metals, carefully considering the pros and cons and understanding the factors that influence the platinum market, investors can make informed decisions on how to incorporate this precious metal into their investment strategy. Let’s delve into the reasons why buying platinum bars could be a smart addition to your investment portfolio.
Understanding Platinum as an Investment
Before we explore the top reasons to invest in platinum bars, let’s understand what makes platinum a valuable asset.
A Rare and Precious Metal
Platinum is significantly rarer than gold and silver, making it a highly sought-after metal for both collectors and investors. Its scarcity alone is a compelling reason for its value and potential as an investment.
Industrial Demand
A significant portion of platinum demand comes from industrial uses, particularly in the automotive industry for catalytic converters. This industrial demand can influence platinum prices and offer investors an alternative to purely investment-driven precious metals like gold.
Investment Diversification
Investing in platinum bars can diversify your investment portfolio. Precious metals often move differently compared to stocks and bonds, which can provide balance in times of economic uncertainty.
👉 Related Reading: History of Platinum as a Precious Metal Investment
Top Reasons to Buy Platinum
Now, let’s focus on the specific reasons why platinum bars might be a wise investment choice.
Hedge Against Inflation and Currency Devaluation
Like other precious metals, platinum can act as a hedge against inflation and currency devaluation. When fiat currencies lose value, precious metals often retain their purchasing power.
Portfolio Diversification
Adding platinum to your investment portfolio can reduce risk by diversifying your assets. Because the price of platinum often moves independently of financial markets, it can provide stability in volatile times.
Tangible Asset
Platinum bars represent a tangible asset that you can hold in your hand, unlike stocks or bonds. This physical ownership can be reassuring for many investors, especially during times when digital assets may seem more vulnerable.
👉 Related Reading: Platinum vs Silver: Key Differences & Investment Considerations
Pros and Cons of Investing in Platinum
Before making a decision, it’s essential to weigh the pros and cons of any investment. Here are some key points to consider when it comes to platinum.
Pros
- Scarcity: Platinum’s rarity can make it more valuable over time as resources deplete.
- Industrial Use: Strong industrial demand can drive up the price of platinum.
- Potential for Growth: Platinum prices can experience significant growth during periods of economic recovery.
Cons
- Volatility: Prices can be more volatile than other precious metals, potentially leading to higher risk.
- Storage and Insurance: Physical platinum requires secure storage and insurance, which can add to the cost of investing.
Factors Influencing the Price of Platinum
Several factors can influence the price of platinum, and understanding these can help you make informed investment decisions.
Supply and Demand
Like any commodity, platinum prices are driven by supply and demand. Economic growth can increase demand from industries, while mining disruptions can affect supply.
Geopolitical Events
Platinum mining is concentrated in a few countries, so political instability in these regions can impact prices.
Technological Advances
Developments in technology, such as new uses for platinum in industry or advances in mining techniques, can influence the market.
Market Sentiment
Investor sentiment towards precious metals, influenced by economic indicators and market trends, can affect platinum prices.
👉 Related Read: 5 Key Factors That Influence Platinum Prices
Platinum Bars vs. Platinum Coins
Investors can choose between bars and coins when investing in platinum. Here are some differences to consider:
Platinum Bars
- Typically have lower premiums over spot price
- Easier to store and stack
- Favored for large investments
Platinum Coins
- Can carry a higher premium due to collectability
- May have legal tender status
- Offer numismatic value
How to Buy Platinum
If you’ve decided to invest in platinum, here’s a step-by-step guide to help you make your purchase.
Research Reputable Dealers
It’s crucial to buy from reputable dealers to avoid counterfeit products and ensure you’re getting fair market prices. Look for dealers with positive reviews, industry credentials, and transparent pricing.
Understand Pricing
Platinum is sold based on the weight of the precious metal content and the current market price of platinum, plus a dealer’s premium. Make sure to compare prices from multiple sources to get the best deal.
Choose Bars or Coins & the Right Size
- Platinum coins typically come in one ounce versions, while the American Eagle Platinum Coin offers smaller sizes as well.
- Platinum bars come in various sizes, from 1 gram to 1 kilogram. Larger bars typically have lower premiums over the spot price, but smaller bars may be easier to sell or trade.
Consider Storage
Safe storage is vital for protecting your investment. You can use a home safe, a safety deposit box, or professional vault storage services.
Keep Records
Maintain detailed records of your purchases, including receipts, for insurance and potential resale purposes.
Final Thoughts on Investing in Platinum
Investing in platinum bars can be a wise choice for those looking to diversify their portfolio with a tangible asset that has potential for growth. Whether you’re attracted by platinum’s industrial demand, its status as a rare metal, or its potential as a hedge against inflation, platinum offers a unique opportunity in the world of precious metals investing.
Like any investment, buying platinum requires research, knowledge, and a clear understanding of your investment goals. With the right approach, platinum can be a valuable addition to a well-rounded investment portfolio.
The precious metals advisors at Scottsdale Bullion & Coin can help you create a diversified portfolio based on your unique budget, goals, and preferences. You can reach a Scottsdale Bullion & Coin advisor by calling toll-free at 1-888-812-9892 or by using our live chat function.