- March 19, 2019
- Posted in Africa
When you think of investing in precious metals, you probably think about gold and silver. It makes sense. These metals have been widely accepted as currency and stores of value for centuries. But newer types of metals have recently broke into the mainstream precious metals industry, providing investors with more ways to diversify their portfolios.
Platinum and palladium are growing in popularity as investment metals, largely due to their scarcity and industrial uses. Though gold and silver remain the most popular investment metals, you can now find a small assortment of platinum and palladium coins and bars on the market. Let’s take a closer look at what makes these metals an attractive investment option.
Platinum was discovered in the 1700s when traces of the metal were found lining gold mines in South America. Spanish conquistadors considered the metal to be a nuisance that blocked what they truly sought. However, it is now known that platinum is far more rare than gold and extremely valuable. In fact, platinum is so rare that the entire amount of mined platinum is believed to fit into an average living room.
Nearly 100 years later, palladium was discovered by William Hyde Wollaston while he was working on a process to purify platinum. Today, palladium is still often found as a byproduct of platinum extractions. And palladium is believed to be even more rare than platinum—possibly up to 15 times as rare. Palladium is largely sourced in South Africa, as well as the US, Canada, and Russia.
Growing Industrial Demand
Though you may see jewelry and designer watches made of platinum, the metal’s main use is in the making of catalytic converters for cars. In fact, nearly half of the platinum supply is used in the auto industry. Additionally, platinum is used in dentistry and in the making of medical machinery electrodes.
Palladium, a metal very similar to platinum, has several of the same industrial applications. It too is used in the automotive and medical industries, as well as being alloyed with gold to make white gold jewelry pieces.
Since these metals are crucial in the manufacture of vehicles, we can expect demand to rise in countries that produce cars. In recent years, China has surpassed the US as the world’s largest automobile producer. It’s likely that we’ll see an increasing demand for platinum and palladium in China because of the automobile industry, as well as emerging technological markets that may also make use of the metals.
Though it’s believed that palladium is more rare than platinum, palladium is actually a cheaper metal. Why? Platinum and palladium are very similar metals. The main difference is that platinum is much denser than palladium. That means that platinum can be manipulated more without breakingl. This makes it the more valuable of the two in terms of industrial uses. However, the similarities between the metals means that many businesses are turning to palladium when possible because of the lower price.
Investing in Platinum and Palladium
Stackers have taken a greater interest in platinum and palladium in recent years. The growing uses for the metals make them attractive as a potential investment option. Platinum and palladium have yet to reach the popularity of gold and silver, largely due to a constricted supply. On top of supply, the prices of platinum and palladium tend to be more volatile than the prices of gold and silver.
With these factors in mind, platinum and palladium tend to attract serious investors more than casual investors. And the investors who are drawn to platinum and palladium may find that options are far fewer than those for gold and silver. You can find platinum and palladium coins and bars from reputable sovereign and private mints, but there are fewer designs and smaller mintages available. After all, the platinum and palladium bullion industries are much newer than the gold and silver bullion industries.
However, serious investors might want to take note of the metals’ recent success. Demand and spot price for both platinum and palladium have been steadily climbing for some time now. These metals might provide a good option for you if you’re looking to expand your investment portfolio.