Platinum Prices Are Down, but Offer Investors Value for Diversification

A stronger dollar is certainly pushing precious metals down amid inflation and rising interest rates. However, that doesn’t necessarily mean that precious metals should be shunned because of the recent weakness.

If anything, it offers investors an opportunity to get precious metals exposure at value-oriented prices. One of the precious metals to consider is platinum.

While it maintains its status as precious metal, it also has industrial use, almost making it somewhat of a hybrid precious and industrial metal. Gold might be seen as more of a store of value, but for investors wanting a mix of precious and industrial metals exposure, platinum might be ideal for their portfolios.

“Platinum is another precious metal that is a popular commodity investment. It is mostly used in the auto industry, the jewelry market, along with industrial applications,” Gainesville Coins noted. “There is also strong investment demand for platinum. Most of platinum’s demand comes from China followed by Europe.”

Like any asset, there will be challenges amid the current market. Platinum isn’t immune to the effects of geopolitics and of course, the global economy.

“There are several headwinds for platinum such as the recent COVID-19 lockdowns in China and Russia’s war in Ukraine,” Gainesville Coins added. “These are impacting its supply and demand. Nonetheless, the outlook for the platinum market appears to be positive with automotive, jewelry, and industrial demand expected to rise in 2023 to 2026 according to the World Platinum Investment Council.”

2 Platinum ETP Options

Prospective investors in platinum might be wondering about logistics. All of that is hassle-free when considering platinum exchange traded products (ETPs), and here are two to consider:

  1. The GraniteShares Platinum Trust (PLTM) provides investors with a simple and cost-effective means of investing in platinum. An investment in physical platinum requires expensive and sometimes complicated arrangements in connection with the assay, transportation, and warehousing of the metal. PLTM offers similar exposure without the logistical challenges of physical platinum.
  2. The iPath Series B Bloomberg Platinum Subindex Total Return ETN (PGM) offers exposure to futures contracts instead of direct exposure to physical platinum. The index is composed of one or more futures contracts on platinum and is intended to reflect the returns that are potentially available through (1) an un-leveraged investment in those contracts plus (2) the rate of interest that could be earned on cash collateral invested in specified Treasury bills.

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