What Is Platinum? Is the Platinum Price Higher Than The Gold Price?

For many decades, precious metals have always attracted investors looking to diversify their investment portfolios. These luxury items have existed for many centuries and have persisted as one of the most widely used financial instruments across the ages.

Platinum, gold, and white gold - many people have heard of them, but there are still some who cannot distinguish between Gold-White Gold or Platinum-White Gold.

In this article, we will explain and analyze the differences between Gold, White Gold, and Platinum, and also assess their price trends for this year. We will also examine whether Platinum will be a safe haven asset worth investing in, given the context of economic recession, market instability, negative sentiment, and the impacts of the Geopolitics.

Platinum, also known as White Gold, is one of the rarest elements in the Earth's crust, with an average distribution density of only 0.005 mg/kg. In its purest form, it has a gray-white, shiny, ductile, and malleable appearance.

Platinum does not oxidize in any thermal environment, is insoluble in acids (inert), electrically conductive, and highly resistant to corrosion. Platinum only dissolves in certain halogen or strong acidic solutions.

Platinum is a rare, silvery-white precious metal that is used in a variety of industrial and jewelry applications. Some key facts about platinum:

It is more rare and valuable than gold. Platinum is about 30 times rarer than gold in the earth's crust.

It is used in catalytic converters for automobiles, as well as in jewelry, electronics, and chemical processing.

Currently, Platinum is predominantly mined in South Africa, extracted from nickel and copper ores, with approximately 80% of the annual global supply (several hundred tons) coming from this country. The production volume of Platinum is much lower compared to gold and silver, being less than 100 times that of silver and 15 times that of gold.

The applications of Platinum across various industries are extremely diverse, including:

The automotive industry accounts for over 50% of the annual production The company specializes in the manufacturing of medical equipment, machinery, and cancer treatment drugs.

This versatility makes Platinum an extremely rare and precious metal.

In jewelry, Platinum is used to create "noble" or "royal" jewelry items that are extremely expensive due to its scarcity and outstanding properties (high luster, high wear resistance, and ductility). Platinum has become the top choice for jewelry, especially for special items like engagement rings and wedding bands. However, due to the rarity and high cost of Platinum, many jewelry pieces now only have a Platinum coating rather than being made of pure Platinum, in order to reduce the product cost.

In order to know more clear about Platinum, here is a comparison table between Gold, White Gold and Platinum (updated to May 28th, 2024):

• Current Price: $975.09 (According to Mitrade)

• Platinum Prices Over the Past 20 Years:

• Highest in 20 Years: $2,276 (in 2008)

• Lowest in 20 Years: $593 (in 2020)

• 20-Year Change: +$137.09 (+16.36%)

Platinum Price Data Over the Past 20 Years-Data Source: Bullionbypost

Since before the 1970s, traders have traded platinum at prices both above and below $200 per ounce. In the early years, this metal sometimes only reached prices above $100 for a few years.

In the early 1980s, platinum saw an impressive surge when it was recognized by investors as a precious metal, nearly reaching the $1,000 per ounce mark. From that 1980 point until the end of the 20th century, platinum prices struggled around the $400 - $600 range.

Over the past 20 years, platinum prices have only increased by 73% - equivalent to around $380, however, there have been many times when platinum prices fluctuated very strongly, providing favorable conditions for investors in platinum to seek profit opportunities.

In July 2022, platinum was only trading around $520 per ounce, but by 2008, platinum created a frenzy with a record high price of $2,270 per ounce. A weak US dollar and concerns over supply chain disruptions due to energy issues in South Africa supported platinum prices. At the same time, platinum became a substitute precious metal for gold, and was also widely used in the manufacture of diamond jewelry.

Just a few months later, platinum prices fell to only $774/oz in November 2008 after a sell-off by investors due to concerns about the emerging financial crisis in the US.

In the 2010-2015 period, platinum regained its market position with prices trading around the $1,400 - $1,600/oz range. Like gold, platinum continued to struggle to find its footing in the market after 2015, as investors sold off precious metals in the face of interest rate hikes by the US Federal Reserve.

Gold and Platinum Price Movements in 3 Years from 10/2021 to 10/2024 - Source: Macrotrends

Starting from the end of 2023 up to now, due to the Fed signaling it will lower interest rates in 2024 and 2025, the prices of major metals have strongly rebounded.

In September 2024, the Federal Reserve reduced rates by 50 basis points to a range of 4.75%-5%. This move led to a rapid increase in gold prices, which broke through the $2,600 level. Conversely, platinum prices have not reacted as strongly and continued their upward trend, currently sitting at $975 per troy ounce. This is below the two-month peak of $1,010 reached on September 26, as the markets evaluate the extent of the anticipated rate cuts from the Federal Reserve in upcoming meetings.

Recent indications of a stronger labor market in the United States have lessened the urgency for further rate cuts, which has diminished some of the support that bullion assets have received from dovish central banks since the onset of their cutting cycles.

 Lower interest rates typically reduce the opportunity cost of holding non-yielding bullion assets. Nonetheless, the World Platinum Investment Council (WPIC) forecasts a decline in total mine supply for 2024, driven by reduced refined production in South Africa, Zimbabwe, Russia, and North America.

Under the pressure of the global platinum supply expected to continue to tighten and be disrupted due to the ongoing conflict in Ukraine and the Middle East showing no signs of cooling, platinum prices have been strongly impacted and are predicted to see significant volatility this year.

Platinum Price Forecasts for 2024 and 2025:

According to the platinum price forecast from LongForecast, in 2024, platinum is expected to reach a high of $1,094 in December and reach $1,021 by the end of 2025.

Meanwhile, CoinPriceForecast believes this white metal will reach $992 by the end of this year and is expected to reach $1,139 by the end of 2025.

The long-term forecast from Wallet Investor suggests platinum could trade around $965.327over the next 12 months and is expected to reach $987.319 by the end of 2025.

Due to this high premium over global spot prices, platinum prices globally are not as transparent as gold prices. As a result, investors interested in platinum often turn to online investment channels, mainly trading platinum CFDs, where they can seek to profit from platinum price movements without actually owning the physical metal.

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3.1 ETFs

ETFs (Exchange-Traded Funds) are a type of passive investment fund that is built and managed on the principle of mimicking the rate of return of a commodity (Gold, Platinum, etc.), stock index or other asset class.

Some major ETFs representing the precious metals Gold and Platinum include:

• For Gold: GraniteShares Gold Trust (BAR), Aberdeen Standard Physical Swiss Gold Shares ETF (SGOL), iShares Gold Trust (IAU), etc.

  
  

• For Platinum: PPLT (the ETFS Platinum Physical Shares ETF), PLTM (First Trust ISE Global Platinum Index ETF), PTM (E-TRACS UBS Long Platinum ETN), etc.

3.2 Futures Contracts

Futures contracts are a form of derivative investment based on an agreement between a buyer and seller to fix the price of a commodity (Gold, Platinum, etc.), stock index or other asset at a future point in time.

Gold and Platinum futures contracts are traded based on the ticker symbols on each exchange. The unique aspect of futures contracts is that investors can trade buy/sell without needing the underlying asset, as the nature of futures is to trade based on the investor's price expectations.

Some major global exchanges for Gold and Platinum futures include COMEX, NYMEX, TOCOM, MOEX, etc.

3.3 Stocks

Another way to invest in Gold and Platinum is to invest in stocks of mining companies that extract these precious metals. Some example stocks include:

• Gold: Gran Colombia Gold Corp. (GCM.TO), Barrick Gold Corp. (ABX.TO), Kinross Gold Corp. (KGC)

  
  

• Platinum: Anglo American Platinum (ANGPY), Impala Platinum (IMPUY), Sibanye Stillwater (SSW)

3.4 CFDs (Contract for Difference)

One of the easiest and most popular ways to trade Gold, Platinum with low capital investment and high leverage recently has been CFDs.

CFDs (Contract for Difference) are a derivative instrument that allows investors to profit from the price difference between the current and future prices of an asset or commodity (Gold, Platinum).

The advantage of investing in CFDs is that it saves the investor the cost of physically storing the precious metals. Additionally, CFDs provide the opportunity to trade in both market directions.

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4.1 Comparing gold and platinum prices

The price movement of platinum and gold over the years - Source: Macrotrend

Since they began to be actively traded, the prices of gold and platinum have generally moved in the same direction throughout the 1980s - 2015 period. As of 2012, platinum had always been the leader among precious metals, even surpassing gold.

In 2008, the price of platinum reached a record high of over $2,200 per ounce, but it wasn't until 2011 that this precious metal could reach the level of $1,921 per ounce.

However, after 2012, platinum was no longer able to maintain its top position, and instead, gold was more highly valued by investors as it is the only metal recognized as having an "equivalent exchange value as money".

Gold has become a safer haven in investment choices to hedge against inflation and economic instability.

In contrast, during periods of economic growth, platinum is seen more as an industrial metal and its price depends on global supply and demand.

Evidence of this is in the years 2018 - 2022, when the global economy faced instability due to a series of events such as the US-China trade war, the China-Hong Kong geopolitical situation, the Covid-19 pandemic, the Russia-Ukraine war, etc. Gold tended to attract more investor interest, with funds rushing into gold in search of a "safe haven", causing this metal to surge in price, at one point reaching an all-time high of $2,070 per ounce in March 2022.

Meanwhile, the price of platinum is largely dependent on the supply (mainly from Russia, South Africa, Heraeus, etc.) and demand in the production of auto catalytic converters, oil refineries, and the chemical and electronics industries globally.

4.2 Comparing white gold and platinum prices

After platinum found its place in the precious metals and jewelry market, "white metal" jewelry became more popular.

Because platinum is expensive and is mainly reserved for making diamond jewelry for the wealthy, gold-mixed products began to be widely developed. One of them is white gold - for those who can't afford platinum, but still prefer a more luxurious type of jewelry than silver.

White gold and platinum are often compared in the jewelry market. According to Creditdonkey, the price of white gold for the same style and weight is much cheaper than platinum.

In the example, the ring is 2mm thick. Depending on the material, the prices are as follows:

• 14k white gold: $240

• 18k white gold: $580

• Platinum: $820

Compared to the price of 18k white gold, the price of platinum is 41% higher. Compared to the price of 14k white gold, the price of platinum is almost 3.5 times more expensive.

It can be seen that platinum is opening up promising investment opportunities in the coming time for several reasons:

Hedge against inflation and instability

Platinum is 15 times rarer than gold. After gold and silver, it is also considered a safe haven when the economy and geopolitics are unstable, as is the current period.

High volatility

Although the platinum investment market is less liquid than gold or silver, the high price volatility of platinum can bring greater potential profits, making investors more excited about platinum.

High application in key industries

After silver, platinum is the second most globally scarce industrial metal. Particularly, as the trend of green hydrogen is being driven globally to reduce fossil fuel consumption, a large growth market for platinum will open up in the production of electrolyzers and fuel cell vehicles.

A perfect substitute for palladium

Palladium is a metal widely used in the automotive industry. However, due to the fact that the price of palladium has tended to be more than double that of platinum in recent years, manufacturers have been looking to replace palladium with platinum alloys in this industry.

In March 2022, the price of palladium reached an all-time high of over $3,300. This opens up the opportunity to increase the future demand for platinum.

Supply shortage

According to a report in early June 2022 by the World Platinum Investment Council, the current platinum supply surplus is low, and the supply is at risk of disruption due to the impact of Russia's sanctions.

In summary, compared to gold and other precious metals, investing in platinum currently still has many superior advantages. Particularly, 60% of the demand for platinum comes from the industrial market, and the volatility of platinum is usually closely linked to the supply and demand situation, helping investors to easily make analyses and forecasts to keep up with new waves of volatility.

Supply and Demand Dynamics:

Platinum is a scarce metal, with most of the global supply coming from a few major producers like South Africa and Russia.

Disruptions in platinum mining and production, such as labor strikes or political instability, can tighten supply and drive up prices.

Fluctuations in demand from key industries like automotive, jewelry, and chemical/industrial applications can also affect platinum prices.

Substitution and Technological Factors:

The ability to substitute platinum with other metals like palladium or rhodium in certain applications can impact demand and pricing.

Changes in technology, such as the shift towards electric vehicles which use less platinum in catalytic converters, can affect long-term platinum demand.

Macroeconomic Conditions:

General economic growth and industrial activity levels influence the demand for platinum from manufacturing and industrial sectors.

Factors like inflation, interest rates, and currency exchange rates can also impact the investment demand for platinum as a store of value.

Geopolitical Dynamics:

Political and economic tensions, such as sanctions or trade disputes, can disrupt platinum supply chains and affect global availability.

The location of major platinum producers and their political/economic stability play a role in price volatility.

Investment Sentiment:

Speculative trading and investment flows in the platinum futures and ETF markets can drive price movements, especially in the short-term.

Investor perceptions of platinum as a safe-haven asset during times of economic or political uncertainty can increase investment demand.

Regulation and Policies:

Government policies, such as emission standards or incentives for green technology, can impact the demand for platinum in specific applications.

Changes in mining regulations and environmental policies can also affect platinum supply and prices.

The complex interplay of these factors creates significant volatility in platinum prices over time, providing both opportunities and risks for investors and industrial users.

In short, gold and platinum are both precious metals and they are worth investing in. In the market, traders often choose gold as a safe haven, but platinum also has its own advantages.

Given the complicated economic situation around the world, investing in gold or platinum is very unpredictable.

Therefore, short-term investing can be a suitable choice for traders who want the opportunity to quickly return their capital and adjust their portfolio based on market trends.