Investing in Gold or Platinum: Which is Better?

If you are new to commodity investment, you may be wanting to know whether it is good to invest in gold or platinum. This Buzzle article tries to compare the two investment options to help you out.
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Comparison between gold and platinum
Did You Know?
While gold enjoys the status of a safe haven investment, platinum does not.

Gold has been an all-time favorite of commodity investors, and platinum has been closely following up. However, investors have not opened up their portfolios to platinum, the way they have managed to invest in gold.

Platinum is stated to be the most rarest metal among all precious metals. Hence, whether it is bullion, coins or jewelry, the prices of platinum, most of the time, are above premium. Also, the limited supply of platinum makes it an expensive investment commodity. Gold, on the other hand, is relatively affordable and can act as a strong inflation hedge which platinum cannot. So, in order to know precisely if it is good to invest in gold or platinum, check out the following key differences, and you will know what is the right thing to do.

GOLD PLATINUM
Inflation and Currency Issues
It tends to increase in price during inflation and currency issues. It does not react favorably to inflation and currency issues.
Rarity
It is not as rare as platinum. Platinum is almost 30 times rarer than gold as 10 tons of ore are used to produce 1 ounce of platinum.
Purity
Gold is available in varying degrees of purity. Post alloying, platinum is 90 to 95% pure.
Density
It is not as dense as platinum. It has a higher density.
Liquidity
Gold enjoys better liquidity than platinum. It may not be easy to find buyers and sellers for platinum.
Prospects
Gold does not face such problems, and the supply and demand remains steady. Owing to less profit, labor intensive industry, and high operating expenses, many mining companies are planning to cut down the production. This limited supply means the prices will rise.
Investment Purpose
It serves as a hedge against economic uncertainties and inflation for investors. It is an important investment vehicle and industrial catalyst. It is often used in catalyst converters, spark plugs, fuel cells, and sensors.
Impact of US Dollar
It is extremely sensitive to the price movement of the US dollar; it increases with a fall in dollar price and decreases when it becomes stronger. The value of platinum is not sensitive to the price movements of the US dollar.
Demand
Gold enjoys an excellent store-of-value demand, which is higher than that of platinum. As the number of new technological breakthroughs will increase, the demand for platinum will also increase with it.
Supply
In a similar situation, world gold will last 10 times more. According to a report by lynncoins.com, the supply of above-ground platinum is limited, and the supply will last for not more than 2 years.
Price
According to a report in forbes.com, gold became pricier than platinum on a few occasions, like post the fall of the Lehman Brothers, 1991 recession, disinflation of 1984, stock market low of 1982, and the gold price rise of January 1980 and December 1974. According to a report on ibtimes.com, history suggests that platinum was traded more than 95% of the time at a premium above gold.
Trading Volume
Gold has a better trading volume than platinum. Trading volume is lower than gold.
Production
According to a report on nuwireinvestor.com, the production of platinum is only 6% of the annual gold production. According to the same report, annual platinum production is about 175 tons.
Market Share
Gold enjoys a good market share in the investment market. Platinum does not enjoy a market share like gold.
History
People have been using gold as an investment since a long time, and hence, they find it easy to trust this metal. As platinum was discovered only in the mid-18th century, it lacks the years and years of investment history that gold has.

No matter which precious metal you choose, don't forget to study the current performance indicators before jumping the gun.

Our Verdict

The automobile industries in India and China have led to a growing demand for platinum, which will make it a strong investment. Also, the growing environmental awareness will give an impetus to platinum demand as it is used in many eco-friendly devices. However, currently the South African mine strikes have affected the supply to the platinum industry drastically. In such situations, gold wins the vote for a safe investment, hands down.
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Published: April 5, 2014
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