The rise of the platinum era

Platinum, the prestigious and expensive white metal has always been valued higher than gold. The continued expansion of advanced and developing economies has caused demand for the metal to grow at a faster pace than it is being mined.

In May 2008 platinum had reached 2060$ and in the same year it had fallen to a low of 850$ in December. Ever since then it has seen a gradual rise and had reached 1829 $ in February 2011.

Platinum and gold are definitely on the same playing field in that they are both commodities in the midst of powerful secular bull markets undergirded by strong long-term fundamentals.  Platinum’s bull gathered momentum around the same time as gold’s, in 2001, and had seen a 448% gain to its 2008 high.

Platinum which is considered the “rich man’s metal” usually costs more than gold

But today the tables have turned, gold had reached a life time high crossing the 30k mark whereas platinum was comparatively much low(touching the lowest point) for the first time in the market.

Though we saw tremendous downfall in gold in the last week, the trend continued to be the same. Currently, 1gm platinum would cost you Rs. 2700 in the physical market (Mumbai) that’s much lower than gold which is running at Rs. 2830.

During times of recession the industrial demand for the precious metal platinum decreases.  Due to this fall in consumption and development, manufacturers tend to purchases fewer amount of goods and make use of the platinum present in their inventories, instead of investing in newer and fresher stock of the metal.  This lowers the demand for the metals and puts the platinum market in a surplus, which automatically sends the market price of platinum plummeting.  However, when the economy rebounds, then there is a greater demand in the jewelry market as well as the automobile industry and platinum again returns to the deficit situation, which will send the prices higher.  This brings profits to the investors as well as the miners who are bringing the metal from the ground

Today platinum prices are running lower than gold and hence people are switching to platinum as one of the modes of investments.

Relative to gold platinum has a unique property that it does not tarnish or wear out.  Also due to its rarity, platinum is considered as a "symbol of prestige". These properties have made platinum a very special metal and a good investment option.

One can invest in platinum in the form of jewellery or bars and ingots of 1, 5 and 10 gram or even 1 ounce. These coins are easily available at retail jewelers.

So from a trading perspective, it makes sense to invest in platinum.  It is not jewelry and the auto industry alone that require platinum, though they are the bigger demand sectors. There are a whole lot of other industries such as turbine blades and medical sensors where platinum is used to a great extent.

The volatile conditions of the market leave a great opportunity for the rise in demand and rates of platinum in the future. Though there is a slump in its current value, this metal has the highest potential to earn returns if invested in today. So it is perhaps, the best opportunity to invest in Platinum, as its value will be better appreciated than gold in the future.