How profitable profitable is the platinum trading
Table of contents
The precious metal platinum, like gold and silver, is well suited as an investment. Most people who invest their money in precious metals buy gold or silver. Platinum is more of a shadowy existence, although it is very well suited to diversifying the precious metals portfolio more widely. Here we tell you what you should pay attention to if you want to invest in platinum as a gel system.
Why use platinum as an investment?
Investments in precious metals are very popular as long-term investments. As a rule, when you think of precious metal as an investment, you first think of gold and silver. Platinum is less known among investors, which is probably also due to the fact that gold and silver were used as means of payment even in ancient times. Platinum, on the other hand, is more of an industrial metal. Almost 80 percent of the platinum extracted is processed in industry. Due to its physical properties, it is mainly used in the chemical, electronics and automotive industries.
Platinum is one of the rare precious metals. Around 200 tons of the precious metal are mined worldwide every year. That is less than ten percent of the silver production. As with gold and silver, the amount of platinum in the world is limited. As a result, the rule here also applies that the price continues to rise the less platinum can still be mined from natural resources.
The fact that platinum is mainly processed industrially is an important factor in the price development. Gold and silver serve as crisis currencies in economically uncertain times. It can be observed again and again that political events have an impact on the gold price. One example of this is the rise in the price of gold following the election of Donald Trump as US President.
The price of platinum is less affected by such events. Industrial demand is more predictable and it is unlikely that demand will collapse spontaneously, leading to a price fall. Rather, the demand for platinum has risen steadily in recent years.
A large part of the platinum is processed by the automotive industry. The metal is a very good catalyst and is mainly used in the construction of catalysts for diesel vehicles. At times the diesel crisis could not do much to the platinum price. But experts assume that the demand for diesel vehicles will decrease significantly in the long term, which could put the platinum price under pressure.
Nevertheless, a continued very high and again increasing demand for platinum is forecast. The reason for this is the use of platinum in many other industries. With industrial progress in the so-called emerging countries, demand is likely to continue to rise.
Experts see another reason for a possible price increase in the current subsidy situation. As already mentioned, the production of platinum is very complex. In addition, mining is becoming less and less worthwhile for mine operators. After the major miners' strike in South Africa in 2014, where around three quarters of the world's platinum is mined, wages and production costs have risen significantly.
This has ensured that less platinum is currently being mined than required. The difference is offset from existing stocks. At some point, however, the stocks will be used up. If demand continues to be high and availability is low, a price increase is almost inevitable.
Of course, there is no guarantee that the platinum price will rise sharply in the long term. Experts recommend platinum as an addition to investing in gold and silver. While gold and silver prices tend to move in a similar way, there is no direct correlation to the price of platinum. When the price of gold falls, silver usually becomes cheaper and vice versa. However, a falling gold price is not an indicator of falling platinum prices.
Buying platinum as coins, bars or jewelry?
You can buy platinum in the form of coins, bars, or jewelry. Platinum jewelry is the worst choice if you want to invest your money in platinum. For platinum jewelry, you not only pay for the precious metal, but also for its manufacture. This is also the case with bars and coins, but the processing of platinum into jewelry is significantly more complex and expensive in comparison.
When selling, you will likely only get the material value. With a little luck, however, you might have such a beautiful piece of jewelry that someone is willing to pay more than the value of the material.
As an investment, platinum coins and platinum bars are much better suited. The best choice for investment is the platinum bar. Bars are where you get the most platinum for your money. This is because bars are even easier to produce than coins, which of course also has an impact on the price.
Platinum bars with weights of 10, 20, 50, 100, 250, 500 or 1,000 grams are common, but there are also platinum bars with only one gram, but these are only conditionally suitable as an investment. Platinum bars are made from pure platinum. Pure platinum is 999.5 platinum. The bar consists of 99.95 percent platinum.
Each bar is produced individually. Since you also pay for the production, it is cheaper to buy a large platinum bar instead of several small ones. If you buy 10 bars of 100 grams each, you therefore pay more than if you buy a single 1 kg platinum bar. In the case of precious metal, the size of the ingot generally has no effect on sales. Since you only get the pure material value, you can cut something from a large bar and only sell part of it.
Various coins are also made from platinum. Since the production is more complex than that of bars due to the minting, coins are always a little more expensive than a bar made from the same amount of platinum. When selling, you only get the material value here, if it is not a rare collector's coin in the best condition.
The advantage of platinum coins is of course the look. After all, a beautiful shiny coin collection looks more like a stack of bars. It can make perfect sense to buy both bars and coins. The most popular platinum coins include the Australian Koala and the Australian Maple Leaf.
What should be considered when buying platinum?
When buying platinum as an investment, the main thing is the purity of the precious metal. Absolutely pure platinum with a purity of 1,000 / 1,000 can only be produced in a highly complex process, so that platinum with a purity of 999.5 / 1,000 is also referred to as pure platinum.
The problem with buying precious metals is that you have no way of checking the purity of the metal. There are no indicators such as shape, size or weight that can be used to identify less pure platinum. This requires devices that are normally not available in a private household.
It is especially important that you can trust the manufacturer. In London there is the “London Platinum and Palladium Market”, or LPPM for short. This is the most important over-the-counter trading platform for palladium and platinum. Only “good delivery bars” are traded there. The LPPM regularly reviews the quality of the platinum offered.
In order to be able to trade on the LPPM, strict quality requirements must be met. A list of LPPM-certified platinum producers is available on the London Platinum & Palladium Market website. If your platinum bar or platinum coin was produced by one of the listed manufacturers, the probability that you will not get the promised quality is negligible.
How and where can I buy platinum?
You can buy platinum from a local precious metal dealer or online. For banks, trading in precious metals is becoming increasingly uninteresting and is more of a niche existence. You can find out more about regional precious metal dealers on the Internet. Make sure that the dealer is a member of an appropriate professional association, for example the professional association of the German coin dealers E.V.
You can find numerous reputable platinum dealers on the Internet where you can easily buy platinum in various forms online. One advantage of buying platinum online is that internet retailers usually react very quickly to changes in exchange rates and adjust their prices on a daily basis. Especially when buying precious metals on the Internet, you should pay particular attention to the seriousness.
Large and well-known dealers are always a good choice. Examples of this would be Degussa or Pro Aurum, among others. But there are also a number of other dealers with a large selection and good conditions. An online platinum dealer should meet certain characteristics in order to be classified as reputable. These include, for example, the following features:
- Shop clear and easy to use
- Prices are updated regularly
- General terms and conditions, imprint etc. are easy to find
- Member of a professional association
- Advice over the phone is possible
- Certificates such as Trusted Shops or TÜV
- Different payment methods
- Collection from a branch is possible
- Large range of available precious metals
- Detailed shipping information
How can I resell platinum?
You can usually sell platinum as you bought it. Most precious metals dealers, both local and internet dealers, also buy precious metals. If you want to sell platinum coins, you should first visit a precious metals dealer. With rare or particularly beautiful coins, there is a possibility that you will get more than just the material value. You first offer platinum jewelery to different jewelers.
If you sell platinum bars or the material value is sufficient for you, you can also sell your platinum to a refinery. Refineries “recycle” precious metals. Your platinum will be melted down and resold as pure metal. Regardless of the form in which you sell platinum to a refinery, you will always receive the pure material value.
Alternatively, you can sell platinum to private individuals. However, this is generally not recommended. With such small items of great value, the risk of being betrayed or robbed is simply too great. Even if the buyer gives you the right amount of cash for your platinum, you can run into problems. After all, you have no way of knowing if the money was stolen. If one of the stolen bills is registered, you can get into trouble if you use it to pay for something. It is of course even worse if you fall for counterfeit money.
How do I properly store platinum?
You can store platinum in a safe deposit box, for example. Although this is associated with costs, bank vaults are very safe. Nevertheless, you should find out beforehand to what extent your platinum is insured should it be stolen in a bank robbery. Many precious metal dealers also offer storage options.
Of course, you can also store your platinum at home. The safest place to do this is in a safe. Storage in a vault or safe is particularly popular because the platinum is safe in it and you can take it out and look at it at any time. To ensure that your platinum is really safe, there are a few things you should keep in mind.
A safe should be screwed to a solid wall. Breaking a safe is a noisy business. Since burglars are generally pressed for time and want to go unnoticed, they would certainly try to steal the entire safe first in order to open it later in a safe place.
The safe should also be well hidden. Every burglar probably knows the classic places. Every burglar should find a safe in a cupboard and there is no safe place for a safe behind sliding furniture. So you should hide it in places where you don't necessarily suspect a safe.
An example of a fairly safe place is the attic.In the attic there is usually only stuff that is either not needed or that is too good to throw away. The things are usually of no interest to burglars, so they probably won't waste time clearing everything aside, because something very valuable could still be hidden behind or under them.
Maybe you don't just leave it with just one safe. You can also get a second safe and store some of your platinum in it. The advantage is practically obvious. If a burglar found a safe and opened it or packed it up, he has made his loot. Very few burglars take the risk of looking further. The loss would be a shame, but at least you still have the platinum in the other safe.
If you are storing platinum at home, you should inform your insurance company about this. Precious metals are usually considered special values that are only insured up to a certain value. In the event of theft, you would only be reimbursed for this value at most. Most insurance companies also insure large sums that are kept in the home in the form of precious metals. However, insurance cover is usually linked to certain conditions. For example, a platinum can only be insured if your safe meets certain security requirements and is not in an easily visible place.
And perhaps the most important tip: If possible, don't tell anyone that you have platinum in your house, not even your friends, because you never know whether this information will eventually reach someone who doesn't quite agree with the seventh commandment (you shouldn't steal) takes so exactly.
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