Like gold and silver, platinum is a precious metal with investment value. Although not as popular, it does have potential that's worth considering. This blog will discuss platinum's scarcity, industrial demand, historical price volatility and undervaluation, investment opportunities, and associated risks.
Platinum Scarcity
Platinum is rarer than gold and silver and is one of the rarest metals on Earth. Most of the world's supply of platinum comes from South Africa and Russia. South Africa holds approximately 60-75% of the global supply, and Russia has approximately 10-15%. Some other minor producers include Zimbabwe, Canada, and the US.
Since the two primary sources are South Africa and Russia, geopolitical instability, labour strikes, or economic policies can severely impact supply. For example, in South Africa, there are many labour strikes and power outages that disrupt the mining process. In Russia, the recent sanctions due to the invasion of Ukraine have affected exports and supply chains.
Platinum mining is also more challenging and expensive than that of other precious metals. It's typically found deep underground and in much smaller quantities within the ore deposits. Platinum refining is also very complex and costly, requiring significant energy input and advanced technology.
These supply limitations of platinum make this metal a more costly and riskier investment than gold and silver.
Historical Platinum Price Volatility
Platinum has typically traded at a premium to gold due to its scarcity; however, in recent years, platinum has often traded at a discount to gold. Before 2008, platinum was consistently more expensive than gold, sometimes as much as two times. However, after the 2008 financial crisis, the demand for platinum fell due to the drop in the auto industry, which caused its price to fall below gold. Platinum prices went from $2,252 to $800 per ounce. From 2011-2015, platinum prices did rebound to $1,800 per ounce; however, they continued to be cheaper than gold, which broke the historical norm.
From 2015-2020, diesel vehicle demand fell after the Volkswagen emissions scandal, which reduced the need for platinum in catalytic converters. Platinum prices fell to $800-$1,000.
During the pandemic of 2020-2021, the price of platinum crashed below $600. However, as economies re-opened, the price corrected itself, bringing it to above $1,200 per ounce.
Today, platinum prices continue to trade lower than gold. Weakening global economic conditions and slowing industrial demand have kept platinum prices volatile, fluctuating between $900 and $1,100 per ounce. Many investors believe platinum is an investment opportunity. If historical trends revert, platinum prices could rise above gold prices.
Undervaluation of Platinum
Platinum has been significantly undervalued in recent years compared to its historical relationship with gold and palladium. Many investors believe platinum is trading below its intrinsic value, making it an opportunity for long-term growth.
As mentioned earlier, platinum has traded at a higher price than gold and palladium due to its rarity; however, this relationship has reversed in recent years.
Year |
Gold Price (USD/oz) |
Platinum Price (USD/oz) |
Palladium Price (USD/oz) |
Platinum-to-Gold Ratio |
Platinum-to-Palladium Ratio |
2000 |
$280 |
$600 |
$600 |
2.15 |
1.00 |
2008 |
$900 |
$2,200 |
$400 |
2.44 |
5.50 |
2015 |
$1,100 |
$1,000 |
$700 |
0.91 |
1.43 |
2020 |
$1,800 |
$900 |
$2,400 |
0.50 |
0.38 |
2024 |
$2,000 |
$1,000 |
$1,200 |
0.50 |
0.83 |
What does this mean?
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Platinum used to be two times more expensive than gold, but today, it is half the price of gold.
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Platinum once traded at five times the price of palladium, but now palladium is at a higher price than platinum.
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If platinum reverts to its historical premium over gold and palladium, prices could double or even triple from current levels.
The key reasons for platinum undervaluation are the following:
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Declining demand for diesel vehicles, which used platinum-based catalytic converters.
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Automakers shifted to palladium in gasoline engines due to cost savings.
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The investment demand has lagged compared to gold. Gold is widely seen as a monetary metal and a store of value, whereas platinum is mainly an industrial metal.
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The economic and geopolitical instability occurring in platinum’s primary source countries, South Africa and Russia
Investment Opportunities of Platinum
As it stands, platinum is viewed more as an industrial metal than an investment metal. As we mentioned above, the current devaluation of platinum presents an investment opportunity. Like most investments, when something is undervalued, its price typically rises over time to reflect its true worth.
The increase in palladium prices, which has been used as a substitute for platinum in some industrial uses, such as the auto industry, poses an opportunity. Automakers may switch back to platinum since it is currently much cheaper than palladium.
It’s use in hydrogen technology also poses a significant opportunity. Platinum is a vital component of hydrogen technology, as it’s a catalyst that helps produce and use hydrogen. Although hydrogen technology is still in its early stages, many governments are investing in it, such as Canada, who recently invested $10 million in 2024 to launch the clean hydrogen hub located in British Columbia.
Platinum Investment Risks
Like all investments, there are some risks associated with investing in platinum. Its volatility in recent years has made it a riskier investment than other precious metals. Additionally, platinum was heavily used in the automotive industry, specifically for diesel vehicles. However, the rise of electric vehicles can further reduce demand for platinum, thus lowering its prices. The supply chain limitations also make platinum a risky investment. Although its rarity should increase the price, it can also do the opposite. If platinum is too hard to acquire, industries will look for alternatives, like palladium, which can lower the demand. This will, in turn, affect the price stability.
Conclusion
There is much to consider when investing in platinum. Its scarcity, historical prices, undervaluation, opportunities, and risks are crucial factors to consider when deciding to add platinum to your portfolio. For those who have a higher risk threshold, platinum still stands as a strong investment opportunity, especially due to platinum’s vital role in hydrogen technology, which has the potential to be the clean fuel of the future. Platinum bullion does not have as much stock compared to gold and silver; however we do offer a limited supply of platinum available for purchase. Check out our platinum maple leaf coins, or call our sales representatives at 1-888-861-0775 to see what other platinum products we offer, as our stock varies day to day.
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