Platinum vs. Gold
"Investing in platinum is just like investing in any other precious metal such as gold, silver or copper," says Josh Simpson, financial advisor with Lake Advisory Group. "The difference between platinum and the others is that it is rarer." Platinum is about 30 times rarer than gold due to its low concentration in the Earth's crust, the WPIC reports.
The majority of platinum supply comes from South Africa and Russia. "Because so much of the supply comes from two countries, their political stability comes into play with the price of the metal as well," Simpson says. "The more stable their governments are, the lower the price."
He says platinum is more influenced by supply and demand than gold, which is more influenced by fear. "When the dollar is weak it leads to a lower supply of platinum because it is normally purchased in U.S. dollars," Simpson says. "Weak supply leads to an increase in price."
This, along with its concentrated supply, are both benefits and risks to investing in platinum, depending on what is happening in the world, he says. For instance, in the fourth quarter of 2020, demand for platinum increased as the global economy began recovering from the pandemic. Meanwhile, platinum supply decreased due to an outage at a major South African plant. This caused the price of platinum to increase in the quarter, even as the price of gold declined – a trend that continued into 2021 when the price of platinum was up by more than 20% while gold fell 15%
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