Platinum as an investment
Encyclopedia
Platinum
has a much shorter history in the financial sector than either gold
or silver
, which were known to ancient civilizations.
Platinum is relatively scarce
even among the precious metals. New mine
production totals approximately only 5 million troy ounces (150 Mg) a year. In contrast, gold mine production runs approximately 82 million ounces (2550 Mg) a year and silver production is approximately 547 million ounces (17000 Mg). As such, it tends to trade at higher per-unit prices.
Platinum is traded on the New York Mercantile Exchange
(NYMEX) and the London Platinum and Palladium Market. To be saleable on most commodity markets, platinum ingot
s must be assay
ed and hallmark
ed in a manner similar to the way gold and silver are.
The price of platinum changes along with its supply and demand; during periods of sustained economic stability and growth, the price of platinum tends to be as much as twice the price of gold, whereas, during periods of economic uncertainty, the price of platinum tends to decrease because of reduced demand, falling below the price of gold, partly due to increased gold prices. Platinum price peaked at US$2,252 per troy ounce
in March 2008 driven on production concerns (brought about partly due to power delivery problems to South Africa
n mines). It subsequently fell to US$774 per troy ounce ($25/g) in November 2008. As of Nov. 3, 2011, the price of platinum is US$1,640 per ounce, compared to US$1,764.40 per ounce for gold and US$34.53 per ounce for silver. Platinum is traded in the spot market
with the code
"XPT". When settled in United States Dollar
s, the code is "XPTUSD".
on the London Stock Exchange
under the ticker symbol and on the New York Stock Exchange
as ticker symbol
s are another way to invest in platinum, although relatively few varieties of platinum coins have been minted, due to its cost and difficulty in working. Since 1997 the United States Mint
has sold American Platinum Eagle
coins to bullion investors.
Platinum
Platinum is a chemical element with the chemical symbol Pt and an atomic number of 78. Its name is derived from the Spanish term platina del Pinto, which is literally translated into "little silver of the Pinto River." It is a dense, malleable, ductile, precious, gray-white transition metal...
has a much shorter history in the financial sector than either gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
or silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
, which were known to ancient civilizations.
Platinum is relatively scarce
Scarcity
Scarcity is the fundamental economic problem of having humans who have unlimited wants and needs in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs. Alternatively, scarcity implies that not all of society's goals can be...
even among the precious metals. New mine
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
production totals approximately only 5 million troy ounces (150 Mg) a year. In contrast, gold mine production runs approximately 82 million ounces (2550 Mg) a year and silver production is approximately 547 million ounces (17000 Mg). As such, it tends to trade at higher per-unit prices.
Platinum is traded on the New York Mercantile Exchange
New York Mercantile Exchange
The New York Mercantile Exchange is the world's largest physical commodity futures exchange. It is located at One North End Avenue in the World Financial Center in the Battery Park City section of Manhattan, New York City...
(NYMEX) and the London Platinum and Palladium Market. To be saleable on most commodity markets, platinum ingot
Ingot
An ingot is a material, usually metal, that is cast into a shape suitable for further processing. Non-metallic and semiconductor materials prepared in bulk form may also be referred to as ingots, particularly when cast by mold based methods.-Uses:...
s must be assay
Metallurgical assay
A metallurgical assay is a compositional analysis of an ore, metal, or alloy.Some assay methods are suitable for raw materials; others are more appropriate for finished goods. Raw precious metals are assayed by an assay office...
ed and hallmark
Hallmark
A hallmark is an official mark or series of marks struck on items made of precious metals — platinum, gold, silver and in some nations, palladium...
ed in a manner similar to the way gold and silver are.
The price of platinum changes along with its supply and demand; during periods of sustained economic stability and growth, the price of platinum tends to be as much as twice the price of gold, whereas, during periods of economic uncertainty, the price of platinum tends to decrease because of reduced demand, falling below the price of gold, partly due to increased gold prices. Platinum price peaked at US$2,252 per troy ounce
Troy ounce
The troy ounce is a unit of imperial measure. In the present day it is most commonly used to gauge the weight of precious metals. One troy ounce is nowadays defined as exactly 0.0311034768 kg = 31.1034768 g. There are approximately 32.1507466 troy oz in 1 kg...
in March 2008 driven on production concerns (brought about partly due to power delivery problems to South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
n mines). It subsequently fell to US$774 per troy ounce ($25/g) in November 2008. As of Nov. 3, 2011, the price of platinum is US$1,640 per ounce, compared to US$1,764.40 per ounce for gold and US$34.53 per ounce for silver. Platinum is traded in the spot market
Spot market
The spot market or cash market is a public financial market, in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market in which delivery is due at a later date...
with the code
ISO 4217
ISO 4217 is a standard published by the International Standards Organization, which delineates currency designators, country codes , and references to minor units in three tables:* Table A.1 – Current currency & funds code list...
"XPT". When settled in United States Dollar
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
s, the code is "XPTUSD".
Exchange-traded products
Platinum is traded as an exchange-traded fundExchange-traded fund
An exchange-traded fund is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI EAFE...
on the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
under the ticker symbol and on the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
as ticker symbol
Platinum coins
Platinum coinPlatinum coin
Platinum coins are a form of currency. Platinum has an international currency symbol under ISO 4217 of XPT. The issues of legitimate platinum coins were initiated by Spain in Spanish-colonized America in the 18th century and continued by the Russian Empire in the 19th century...
s are another way to invest in platinum, although relatively few varieties of platinum coins have been minted, due to its cost and difficulty in working. Since 1997 the United States Mint
United States Mint
The United States Mint primarily produces circulating coinage for the United States to conduct its trade and commerce. The Mint was created by Congress with the Coinage Act of 1792, and placed within the Department of State...
has sold American Platinum Eagle
American Platinum Eagle
The American Platinum Eagle is the official platinum bullion coin of the United States. The coins were first released by the United States Mint in 1997. It is offered in 1/10, 1/4, 1/2, and 1 troy oz varieties and consists of .9995 fine platinum...
coins to bullion investors.