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Buy Platinum As A Platinum Investment

The History Of Platinum

While gold has fascinated civilizations for thousands of years, the existence of platinum is believed to have been first discovered by South American Indians within the last millennium.  However, it wasn’t until the fifteenth century when Spanish explorers arrived in Central and South America that this metal became known in Europe.  Although the Spanish were searching for gold, they encountered platinum during mining operations and originally considered it an annoyance.  Scientists in Europe were intrigued by the metal’s durability and other properties, and it was accepted as a new element in 1751.

As the industrial revolution took hold in the latter part of the eighteenth century, platinum was used in the manufacture of lab instruments and in crucibles for the production of glass.  It quickly caught the eye of goldsmiths and jewelers who fashioned the metal into luxury watch chains and cutlery.  As refining techniques improved at the beginning of the nineteenth century, the availability of the metal increased and demand rose along with it.  It began to appear in gun parts, batteries, and was used in hydrogen purification and the production of chemicals.

Up until the early 1800s, Colombia was the world’s largest producer, but it ceased exporting the metal in 1820.  When the Russians discovered the metal two years later in the Ural Mountain gold mines, it began to mint platinum rubles.  It was at this point that platinum began to take on an aura similar to gold as a symbol and holder of wealth.

Why A Platinum Investment?

While the demand for platinum continues to rise, there is evidence suggesting that most of the supply is limited to two major areas: north of Pretoria, South Africa, and northern Siberia.  There is no verifiable data regarding remaining supplies in Russia, but many have speculated that they are rapidly dwindling.  The annual production of platinum is about 5% that of gold and the extraction and refinement process is complex and time-consuming.  Some estimates place the above-ground reserves at about one year’s supply, so any reduction or suspension of ongoing mining operations would impact the platinum price.

Platinum is now a primary element of the jewelry industry as it has become the most popular setting for diamonds and other gemstones.  In addition, it is a critical component of computers, surgical and dental equipment, automotive parts, and cancer-related drugs.  As new uses for the metal are discovered, this puts additional pressure on the available supply and is a consideration for those that may decide to invest platinum.

The current platinum price is well below its all-time highs, and those that advocate that you buy platinum now believe it is on a path to exceed those highs.  Like gold, platinum is viewed as a hedge against inflation, economic uncertainty, and bear markets.  As economic growth in countries such as China and India continues to accelerate, they have ramped up their acquisition of precious metals, including platinum.  As with any investment, do your own research since there no one can guarantee future performance.

Bullion As A Platinum Investment

Japan first introduced platinum bars that were sized for purchase by individual investors.  Following the oil embargo in the mid-seventies, precious metals experienced escalating prices during the following decade as demand surged.  Interest for invest platinum spread to the U. S. and Europe, and now there are several options for those desiring to buy platinum bullion.

For those desiring to buy platinum online, there are dealers available that sell a variety of precious metals through their websites and some coins are available directly from government mints.  Should you elect to buy platinum through a private dealer, do your due diligence to ensure that the company is reputable and stands behind its products.  If they won’t offer to buy back the bullion they sell you at a later date at the prevailing platinum price, you might consider shopping elsewhere.

Platinum bullion is produced by Produits Artistiques de Métaux Précieux (PAMP) in 1 troy ounce bars.  Located in Switzerland, it is universally recognized as one of the premier sources for all precious metals.  The bars are .9995 pure and are guaranteed for weight and content.  Bars have also been produced by Engelhard and Johnson Matthey, but check for current availability.

There is a premium over the spot metal price for bullion purchases, but it may be smaller than an equivalent weight in coins.  Before you buy platinum online, make sure that you know the platinum price, the exact premium, and if there are insurance and shipping fees.  Also, lock in the price the day you make the purchase.

Types Of Platinum Coins

The availability of platinum collector coins is extremely limited since its use as money was limited to a brief period with the Russian ruble.  In 1983, a platinum coin was issued by the British possession The Isle of Man.  The success of this coin as a way to invest platinum prompted the introduction of the Canadian Maple Leaf and the Australian Koala in 1988.  It was almost ten years later that the U. S. Mint unveiled the platinum Eagle.  The demand for all of these coins has made them somewhat difficult to obtain, and there may be a delay in filling orders to buy platinum coins.

Other Platinum Investments

Beyond coins and bars, there are other ways to indirectly buy platinum by investing in companies that specialize in the mining and production of precious metals.  There are stocks, index funds, and mutual funds that may be especially appealing to small investors that don’t have the financial resources to buy large enough quantities of bullion to make it worthwhile.  This provides professional management of your platinum investment while eliminating the need to obtain secure storage for the bullion.  The market values of such investments do not necessarily track directly with the platinum price, but stocks and funds do offer the potential for dividend payments.

Options on platinum futures are also available as a way of hedging your portfolio.  Options essentially allow you to bet on the future direction of the platinum price within a specified time period.  Some people invest platinum by purchasing both bullion and options to balance their risk in uncertain times and markets.