Investing In Other Precious Metals
Most people associate investing in precious metals with just gold and silver. But what about others? What about platinum? What about palladium? And even what about rhodium? Let’s investigate further…
Why Invest in Platinum?
Platinum is the most widely used and widely traded metal in the platinum group of metals (PGMs). The other five metals in this group are: ruthenium, rhodium, palladium, osmium and iridium. All these metals, especially platinum, have properties that make them very useful in a number of industrial processes. Platinum is highly resistant to corrosion, wear and any kind of tarnish. Its shine and lustre, as well as resistance to wear make it the increasingly preferred choice in fine jewelry too.
A number of factors combine to make platinum investment an attractive proposition especially when you are investing in commodities. We will go over the six most important factors below:
Reason #1: Rarity
Platinum is one of the rarest metals in the periodic table. As a comparison, the annual production of gold is as much as 16 times that of platinum. Compared to 2500 tons of gold mined every year, only about 150 tons of platinum is produced annually. This rarity leads to platinum prices being as much as twice that of gold in times of economic growth.
Reason #2: Its Many Industrial Uses
Platinum has a lot of industrial uses including hard disk drives, LCD displays, eyeglasses, paints, pacemakers and many more. This is why the platinum price is very strongly correlated with the growth of the economy. When the economy is growing fast, platinum prices grow with it. At this point in time the world economy is still recovering from the 2008 financial crisis and platinum should rise as the economy eventually recovers.
Reason #3: Growth Due To Environmental Regulation
With the world’s attention shifting towards climate change, platinum is one of the commodities seeing an upsurge on the back of this. The reason is that platinum is heavily used in catalytic converters, which are used to control the emission of harmful gases from internal combustion engines. As the European and international car manufacturing guidelines become stricter and stricter, manufacturers are compelled to install more catalytic converters, resulting in more demand for platinum.
Reason #4: Growth Due To Jewellery
Over the last few years platinum has been catching on as one of the favoured metals in the making of jewellery. This trend is expected to continue, giving a boost to platinum prices and demand.
Reason #5: Demand From China and Other Developing Economies
The Chinese economy has been growing at rates of more than 8-10% over the last decade, and much of this demand is from the industrial sector. With its many uses in industry, platinum has seen rising demand from China. The growth of China portends more growth and demand for platinum.
Reason #6: Investing in Platinum is Easy
Platinum is traded in the New York Mercantile Exchange (NYMEX), which is the world’s leading market for commodities and where the spot price is determined each day. Platinum is also available as an Exchange Traded Fund in the New York Stock Exchange (NYSE) and as an ETF in international markets such as the London Stock Exchange. Further, you can invest in platinum physically by buying jewellery or bullion.
>> Price of Platinum – Live price charts
When talking about precious metals, people usually refer to gold, silver and even platinum. Very few refer to the precious metal called palladium; so why should they invest in palladium when they know so little about it? It is not surprising that palladium investment rarely features in the investment plans of even veteran investors.
So, what makes the palladium metal an attractive asset in your investment portfolio?..
What is Palladium and Why Invest in it?
Palladium is one of the metals in the group known as the platinum group of metals (PGM) which is already referred to above.
Of the six, palladium is the most widely used, mostly because of its larger annual production. Around 220 tons of palladium is produced each year compared with 150 tons of platinum. However, even with its higher production, palladium still demands premium pricing because it competes directly with platinum in its industrial uses.
It should also be noted that 220 tons of annual production is much less than that of other metals such as iron and aluminium, making palladium a precious metal.
Like platinum, palladium is used in the manufacture of a number of automotive products such as spark plugs and catalytic converters. It is also used in the production of multilayer ceramic capacitors and a number of other electronic components. All the time that these sorts of products remain in use there will be a demand for palladium.
Palladium investment goes hand in hand with platinum investment, because both metals are similar in their industrial uses. One difference when we compare palladium with platinum though is that platinum is used more in jewellery. However, palladium has been catching up in this regard too, and palladium jewellery is one of the rising sectors of growth for this metal.
How to Invest in Palladium
Palladium is traded in the New York Mercantile Exchange (NYMEX) where its spot price is determined from day to day.
If you do not want to trade in commodities or palladium directly, you can engage in palladium investment by buying exchange traded funds such as the ETF Physical Palladium Shares. Another ETF that trades in palladium is the VelocityShares 2x Long Palladium. Apart from ETFs, you can also buy Exchange Traded Notes that trade in palladium.
You can also buy palladium bullion coins, especially from the Royal Canadian Mint which has released the Palladium Maple Leaf, a one troy ounce coin with a fineness of 0.9995.
Other coins from private firms are also available in the market, which can serve you well as a form of physical palladium investment. The U.S. Mint, the national mint of the United States, is also in the process of studying and working for the release of an American Eagle palladium coin. When released, you should be able to buy palladium coins directly from the U.S. Mint.
This metal is directly linked with so many industrial processes that palladium investment is akin to investing in the future growth of the world economy. Investing in gold and silver is recognised as safe-haven investing, but when you want to bet on the growth of the economy investing in palladium should be a consideration.
>> Price of Palladium – Live price charts
Gold and Silver vs Platinum, Palladium, and Rhodium
In this video precious metals expert Mike Maloney answers directly the question of what are the best precious metals to invest in.
He argues that money has to be a store of value over a long period of time and that gold and silver fulfil that requirement because they have a certain amount of rarity. He contends that other precious metals such as platinum, palladium and rhodium are too rare and that they never have been and never will be money.
His opinion is that if the world has a crisis people are going to rush into gold and silver, not these other precious metals. Gold and silver have been the prominent medium of exchange for 5000 years since when they were minted into coins of equal weight. That was how money first sprung into existence.
He explains how throughout centuries countries have returned to gold and silver only as a means of exchange. They’ve tried spices, grains and oils but gold and silver always win out because they are portable, divisible and durable.
Mike’s conclusion is that investing in gold and silver is the way forward.