If there's a broadsheet for precious metals, then one can expect to read gold and silver dominating the front page every day. Not to be outdone, platinum will also have its own share of positive press in the inner pages as high demand from several industries from industrial to automotive to jewelry and health care and so on, continue to rely on platinum because of its plethora of uses.
A rare and non-corrosive metal, platinum consistently possess an expensive value despite cornering a smaller market share as compared to the more popular precious metals of gold and silver. This fact doesn’t diminish the lure of platinum as a popular investment choice.
As world economies shifts to more environment-friendly materials and metals, the demand of platinum is expected to rise because it is considered as an eco-friendly metal. Easy-to-mine while producing a steady supply, the price of platinum—notwithstanding its volatility— is forecasted to rise significantly in the coming years.
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History of Platinum
Mankind's early use of platinum can be traced back to 1200 BC in ancient Egypt. Platinum was also used by Pre-Columbian Americans to create objects made of gold and platinum alloy from 600 BC to 200 AD.
Among the earliest written reference to platinum appeared in the writings of Julies Caesar Scaliger in 1557 when he described a noble metal found in Mexico.
Extensive research about platinum were done extensively during the entirety of the 18th century in what is known as the "platinum age" in Europe—specifically in Spain.
In modern times, platinum is mined primarily in South Africa and Russia accounting for 80% of the world's supply of platinum. In 2014, there were 218 tonnes of platinum sold with 98 of it used to manufacture vehicle emissions control devices and the rest for jewelry making, petroleum refining, chemical production and other industrial and technology use.
Factors That Influence the Price of Platinum
Likened to silver and other precious metals, platinum can be influenced by several factors that may lead to its price volatility or fluctuations in the market. Here are the main factors that usually dictate the prices of platinum:
- US Dollar Currency Strength: The strength of the US dollar against the South African Rand and the Russian Ruble can affect its price in the world market. Why against the currencies of South Africa and Russia? this is because South Africa and Russia are the two biggest suppliers of platinum. A weaker dollar leads to less platinum mining incentive and therefore decreases supply and increases platinum prices.
- Economic and Political Stability: This applies to the stability of the region where platinum is mined in great quantity. With South Africa and Russia being the two biggest suppliers of platinum, one must keep track of the economic and political situation—as well as trade restrictions, new tariffs— in these two countries.
- Auto Industry Demand: Since platinum enjoys high demand from the automobile industry, the price of platinum is also affected by any trends in the auto industry. Because platinum is a key component of catalytic converters that reduces emissions of vehicles, the price of platinum is seen as moving in parallel with the demand for more environmental-friendly vehicles.
Ways to Invest in Platinum
- Buying a Physical Platinum: One can invest in a physical form of platinum much like with gold, silver and other precious metals, in the state of bars and coins. Of course, this manner of investing in platinum is a rarity as compared to investing in platinum stocks and ETFs.
- Platinum Stocks: An easier and more popular option to invest in platinum is through investing on platinum stocks from equities market through a stockbroker or a trading platform such as eToro. Some of the top platinum companies are: Anglo American Platinum (AAL), Thaisa (THS) and Impala Platinum Holdings (IMP).
- Platinum ETFs: This is another simpler and easier way to invest in platinum as compared to owning a physical form of the precious metal. Platinum ETFs allow investors gain exposure to platinum without requiring to owning a physical asset. Platinum ETFs is like a typical ETF that offers investors diversified holdings and tax benefits as compared to mutual funds. Here are a few of the most popular ETFs for platinum today:
- Aberdeen Platinum Physical Shares ETF (PPLT)
- GraniteShares Platinum Trust ETF (PLTM)
- iPath Series B Bloomberg Platinum Sub Index Total Return ETN (PGM)
- Sprott Physical Platinum and Palladium Trust (SPPP)
- Platinum Futures: Futures investing allows investors to use leverage to purchase contracts tied to the value of platinum. If the prices decline, investors must create additional margins to retain positions. The New York Mercantile Exchange (NYMEX), a part of the Chicago Mercantile Exchange (CME) offers platinum futures contracts.
Trade Platinum via CFDs
More investors are opting to invest in platinum and other precious metals through the method of CFD trading or the contract-for-difference derivative instrument.
What is CFD?
CFDs allow investors to speculate on the value of an investment asset (in this case, the platinum) without purchasing assets in ETFs, options, bullions, options or mining shares.
Many regulated brokers and trading platforms such as eToro, offer platinum CFDs.
How to Start CFD Trading of Platinum?
There are several ways of engaging in CFD trading of platinum. All you need to do is find a reliable broker or CFD trading platform such as eToro to open an account and deposit your fund.
Trading platinum in eToro's CFD trading platform doesn't require any storage fees since you won't be trading any physical platinum.
How to Trade Platinum on eToro?
- Create an account on eToro / Log-in your account for existing users.
- Click "Discover".
- Select "Commodities".
- Choose “PLATINUM”.
- Select BUY or SELL.
- Key in your desired amount to invest or the number of platinum units you want to trade.
- Review and set the stop loss, leverage, and take profit parameters.
- Select “Open Trade”
Ready to trade platinum with eToro?
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