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Why It’s Worth Taking Another Look at Platinum as an Investment Option

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Why It’s Worth Taking Another Look at Platinum as an Investment Option

One of our regular customers, who also appears to be a savvy investor, recently reached out to us inquiring about platinum as an investment. Most of his investing until now has been in gold and silver coins and bars and he had not considered platinum until recently.

He made the point that the price of platinum (at the time of this writing), is $960, which is well below the all-time high set in March of 2008 of $2,300. This is about 40% of the highs reached nearly 16 years ago, which makes it an appealing option, especially when considering the upside potential for this beautiful white metal.

We also discussed the gold to platinum ratio. Historically, the price of platinum has been a decent bit higher than gold. Case in point, the gold price was roughly $900 an ounce when platinum was $2,300 an ounce. It wasn’t until 2011 when the price of gold took the pole position, and hasn’t looked back.

Platinum is an interesting metal from a couple of perspectives. For one, it is among the scarcest metals on the planet, and in fact is about 10 times as rare as gold. Historically, its been viewed more as an industrial metal, used most notably in catalytic converters, but in recent years, demand as an investment metal has spiked.

Another factor to consider is that the largest producers of platinum are generally considered unstable countries from a geopolitical perspective. South Africa is far and away the largest producer of platinum, followed by Russia and then Zimbabwe. The United States rounds out the top 4.South Africa Unrest Map and platinum risk

If you’ve been reading the news as of late, you may be aware that South Africa is politically unstable. Land confiscation, violence and civil unrest have ramped up in recent years. Furthermore, mining strikes in the country are not uncommon. Additionally, South Africa is a dangerous place to operate from a private property perspective. It would not be out of the realm of possibility for the government to nationalize a platinum mine.

At present, the Russia-Ukraine conflict is nearly two years in the making. While most of the Western world has assessed sanctions against Russia, all indications are that the country hasn’t felt the impact of these measures, as they’ve found ways to circumvent the sanctions. The point is that Russia is highly unlikely to export platinum to countries that have imposed sanctions against it, which could result in a shortage for those countries that need it most.

Lastly, Zimbabwe is in its most recent bout of hyperinflation. A few years ago, they drove off a number of farmers and turned the farmland over to inexperienced farmers. The country’s food output plummeted, resulting in Zimbabwe becoming a net importer versus net exporter of food. Needless to say, the fiscal and geopolitical situation in Zimbabwe isn’t stable, which makes it a difficult country to rely on as a source of platinum.

With respect to investments, platinum is available in the form of coins, bars and rounds – much like gold and silver. However, because it’s rarer and fewer coins and bullion are produced, the premiums tend to be a bit higher than other metals. If you’ve attempted to price up an American platinum eagle, especially a proof version, you’ve probably noticed that at times there can be a significant difference between the spot price and the price for physical platinum.

The most popular platinum coin is the American platinum eagle followed by the Canadian platinum maple leaf. Other popular options include British platinum britannias, Australian platinum kangaroos, the Isle of Man Noble, the Shooting Swiss Thaler, and the Australian koala and platypus, just to name a few.Platinum Coins

Are we suggesting that there’s no downside risk to platinum? Not at all, but at current levels, there appears to be somewhat limited downside risk and substantial upside potential. When investing in precious metals, or for that matter, when considering any investment option, this is a critical factor to take into consideration.

As mentioned above, platinum coins and bars aren’t as prevalent as gold and silver, but Atlanta Gold & Coin Buyers typically has platinum inventory on hand. If you’d like to take advantage of this seemingly underpriced asset class, contact us today to reserve your platinum coins or bars while supplies last.

We look forward to hearing from you and earning your business.

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Tony Davis
Tony Davis is the owner of Atlanta Gold & Coin Buyers, a full service Atlanta based coin and bullion dealer specializing in buying, selling and appraising coins and coin collections of all types and sizes. Tony frequently writes on various economic and numismatic related topics affecting the coin and bullion markets and has been published on some of the industry’s leading websites, including Coin Week, the American Numismatic Association, Coin Collector, Coinflation, and Coin Auctions Help, just to name a few. Visit Atlanta Gold & Coin’s website at atlantagoldandcoin.com to obtain additional information on the products, services and educational resources offered by his company. Tony can be reached at sales@atlantagoldandcoin.com or at 404-236-9744

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