Platinum, one of the most expensive exchange-traded metals on the market has been gaining in popularity in recent years thanks to its wide variety of uses. Platinum is a very popular metal for use in auto catalysts which are products that help car makers clamp down on harmful emissions and are required in most countries for all cars. While these catalysts take up the majority of platinum’s demand the product is also heavily used in electronics and increasingly, jewelry as well. This use in jewelry likely stems from the metal’s prestige as well as its brilliant white finish that makes it a great compliment to precious stones or diamonds.
Platinum has appeal as an investable asset for several reasons. First, if investors continue to lose faith in the fiat currencies and the U.S. dollar in particular, demand for platinum could rise as an alternative, although less so than the other precious metals since platinum is so scarce. Platinum also has appeal as an inflation hedge or as a way to play increasing demand for the car industry since so much of the product goes towards auto catalysts. Thanks to this heavy industrial demand, prices of the metal are often heavily correlated to automobile production and usage making the metal increasingly dependent on emerging markets for higher prices. Furthermore, since the production of the metal is so heavily concentrated in emerging nations, the product is often prone to price spikes which could make the product a great options for traders in the precious metals space.
Investors seeking exposure to platinum have a multitude of options. In addition to buying futures contracts on platinum or purchasing and holding the physical metal in the form of coins or bars, there are a number of ETF and equity options available as well. Investors can purchase stocks or ETFs of companies that mine the metal as the primary way to achieve equity exposure. Lastly, investors also have the option of buying platinum ETFs, either ones that track the futures for the metal or those that physically hold the product in secure vaults. Thanks to the metal’s extremely high value to density ratio, holding platinum is a very cheap way to achieve exposure to the precious metal.