As an amateur should I consider investing in Platinum?

Should amateurs invest in platinum? Is investing in platinum attractive for amateurs? As an amateur should I be investing in platinum? Why is investing in platinum more volatile than gold? Does demand for platinum by industry affect its price? Is demand for platinum linked to sales of diesel? Is platinum too dependent on the automotive market? What is the longer term outlook for platinum?

Previously we have looked at Gold as an investment for the amateur or first time investor, but of course Gold is not the only precious metal commodity out there. Many consider Platinum to be equally attractive but with that also comes some added complexities!

But what makes Platinum so attractive?

Well firstly it is true that platinum is much rarer than either gold or silver with the vast majority being found in South Africa and Russia. I addition to this limited supply it is also extremely costly in terms of both capital and energy to mine. Obviously both factors together will drive the price (or at the very least keep it) at artificially high levels.

At the same time there is a growing demand for the commodity, not just from investors but also for industrial uses. Its durability, very high melting point, electrical conductivity and corrosion resistance all come together to make Platinum very useful, particularly in the automotive, industrial and jewellery markets.

As with gold the best way to invest in platinum is to physically own the metal but there are actually less ways to do this than with gold and silver. Platinum bars are the obvious and probably easiest form and somewhat helpfully they usually come in smaller sizes!

Both gold and platinum are often thought of as good hedges by investors primarily against inflation but also if there is a general loss of confidence in the main currencies, particularly the US Dollar. However, it is Platinum’s industrial uses that actually contribute to its price volatility.

Too dependent on the automotive market?

The most common use for Platinum is in the car industry where it is used in the manufacture of catalytic converters, primarily for diesel engines, to reduce the production of harmful emissions. And this is where the amateur investor has to be very careful.

Like any other commodity the pricing of platinum is determined by simple supply and demand. However, Platinum differs from other commodities, and particularly gold, in that its large range of industrial uses means that its value is more akin to an industrial metal.

The VW debacle

The volatility of platinum is demonstrated perfectly by the VW debacle that happened at the end of 2015. The news that VW had been falsifying emission test results hit the demand for diesel engines very hard which turn hit the demand for platinum, such that following the scandal the price of platinum fell by 15% in a few short months.

The longer term outlook for platinum?

Again the outlook is also a somewhat confused picture particularly for the amateur investor. The fact that platinum has been one of the worst performing precious metals for some years looks set to continue.

Changes in consumer demand and taste means that more people are now buying petrol vehicles (which tend to use Palladium in their catalytic converters) rather than diesel and so the longer term demand for platinum looks set to decline.

On the other hand, China, one of the largest vehicle markets in the world, is in the process of implementing much tougher emission standard for diesel vehicles (scheduled for January 2018) which should be bolster demand for platinum somewhat.

Watch this space, but be aware if you are considering investing in platinum.

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About the author

Phil Blackett

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I am an entrepreneurial retailer and wholesaler with a strong track record of achievement and success in E-Commerce within a B2C environment.

For over 30 years I have successfully founded, created and operated businesses within Men’s High St retail and online optical. I’ve built successful, high-performing teams – both technical and non-technical and always enjoyed developing profitable, long-term relationships with clients. 

It hasn’t all been plain sailing. I’ve learnt some hard lessons along the way that have shaped my ‘people first’ approach. I have a laser focus when it comes to margin, I believe profit tops turnover, cash is king and putting the customer first builds the right reputation. I’ve worked extensively with clients and suppliers all across the globe – giving me a truly international perspective in understanding cultural nuance and sensitivity.

By the very nature of my career to date, I have a very broad business experience and perspective. From developing international supply chains, merchandising and store design to raising VC funding, negotiating with banks and property agents and building high performance E-commerce sites – I believe I can bring value and insight to solve a broad range of business challenges.

Throughout my business career hindsight would have been a wonderful thing. I feel that I’m now able to share my knowledge and experience with others and help them avoid pitfalls and overcome the challenges that I’ve faced over a thirty-year career. In addition I believe my e-commerce knowledge and experience is very much at the cutting edge – enabling me to not only support ‘traditional’ small business – but also add value to those looking to establish themselves in the digital economy.

Additional Skills

E-commerce business seeding and transformation

I am also a Director of London Gold Bullion.



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