While gold and silver have proven themselves as wealth-preserving metals over millennia, platinum tells a different story—one of speculation and industrial dynamics.
Here’s what you need to know: Platinum is a speculative metal, not a wealth preservation tool. This metal trades at a higher premium and liquidates at a larger discounted price, meaning the spread is much larger than gold or silver.
The Market Dynamics
Recent research from the World Platinum Investment Council (WPIC) presents some intriguing developments:
- Platinum and palladium prices have reached parity for the first time since 2018
- Market forecasts suggest platinum deficits until at least 2028
- Automotive platinum demand is growing due to substitution for palladium in gasoline vehicles
- The platinum price remains historically undervalued compared to gold
The Platinum Industrial Puzzle
Platinum’s primary industrial uses include:
- Automotive catalytic converters (about 40% of demand)
- Chemical manufacturing (fertilizers, nitric acid, plastics)
- Medical equipment and cancer treatments
- Laboratory equipment
- Electronics and electrical contacts
- Glass manufacturing equipment
- Emerging applications in the hydrogen economy
The Automotive Wild Card
A fascinating trend is emerging in the automotive sector. Manufacturers are increasingly substituting platinum for palladium in gasoline vehicles, with over 600,000 ounces substituted in 2023 alone. While this suggests increased demand, remember – this, too, is speculative, as automotive industry trends can shift rapidly
Making Informed Decisions
When considering platinum, here’s what you need to know:
- Approach it as a speculative investment, not a wealth preservation tool
- Understand that industrial demands, not monetary factors, drive its price
- Consider that automotive sector trends present uncertain outcomes
- There is a much larger spread between the buy and sell prices
- Despite projected deficits, external factors like monetary policy can impact prices
The Bottom Line on Platinum
While platinum has its place in the precious metals market, it’s crucial to understand what you’re buying. This isn’t your “sleep well at night” metal – that’s what gold is for. Platinum is for those who understand and accept its speculative nature and are prepared for the volatility that comes with it, which is why we don’t recommend it or its sister metal, palladium for wealth preservation.
A Personal Note
When it comes to investing in precious metals, doing your due diligence is essential – and that includes checking us out. As possibly the oldest precious metals firm in the United States, we’ve spent over 50 years building trust through transparency and honest dealing. But don’t just take my word for it. Talk to our non-commissioned brokers, who will answer all your questions without ever pressuring you for a transaction. That’s not how we operate. We’re a family business, and we treat every client like family. When you work with CMI, you’re not just making a transaction – you’re joining a different kind of experience, one where relationships matter more than sales. Come be part of our extended family of informed precious metals investors.
Johnny on the Spot: A transparent article series by Johnny Estes, VP of CMI Gold & Silver. Get honest insights on current events shaping the precious metals market, free from fear-mongering, to help you make informed investment decisions.
Have a precious metals topic you would like us to explore? Comment below!
