The huge success of the Isle of Man’s initiative in issuing platinum coins inspired other governments to also take the plunge. Within five years of the Noble coming into circulation Australia issued the Platinum Koala and Canada the Platinum Maple Leaf as legal tender. Although both coins made their appearance within a few months of each other, they were highly successful and were in great demand by investors.

For the next nine years Australian and Canadian coins were the leading platinum coins in the world. During the 1990s a number of limited edition high value platinum coins were issued but they were for numismatic purposes only and were collectors’ items and not legal tender.

In 1997 the US Mint finally joined the platinum bandwagon with the launch of the Platinum American Eagle. The arrival of this coin saw the investment levels double in the space of just one year. The Platinum Eagle soon became the preferred platinum investment option and the demand for these coins was so great that most denominations sold out almost immediately. In 1998 the US mint launched the Vistas of Liberty series of Platinum coins in a limited time program that ran till 2005.

While the modern investor in platinum has the options of investing in the form of exchange traded futures and options, bullion bars, and numismatic coins, legal tender coins remain extremely popular with those who prefer to have the purity of their investment backed by government guarantee as well as the ease of exchange and conversion that these coins offer. Another benefit that many investors like is their easy storage and transportability.

The problem lies in the fact that platinum is so difficult to come by. Between 5 and 6 million ounces of platinum are mined each year and that too under the most difficult of conditions. 5 million ounces is less that 5% of the world’s gold production. Obviously it is a rare and difficult metal to obtain.

Platinum’s scarcity and ever increasing applications make it a very attractive investment option. The history of its price performance is drawing the attention of investors who until recently never looked beyond gold and silver. Precious metals are known for the fact that they normally appreciate when other investment options like stocks and bank deposits are offering low or even negative returns. That is what makes gold and silver so popular as investment options.

What more and more people are coming to realize is that in the case of platinum, not only is the safety of hedging against the drop in the value of other investments available, but so is the opportunity for huge capital appreciation. The limited availability and increasing demand for the metal ensures this. Studies estimate that should platinum mining come to a halt for any reason, the above ground reserves of the metal will only suffice to meet one year’s demand. In the case of gold, should the same thing happen, the above ground reserves would be enough to last for 25 years.

There are two factors that determine the value of a metal – its availability and the demand for it. Clearly platinum is one of the rarest of metals. And it is one with the fastest expanding range of application, driving up its demand. Smart investors have kept both these factors in mind while investing in platinum.

So what happened?  Well, primarily the auto industry collapsed.  The largest user of platinum group metals ( platinum, palladium, and even rhodium ) is the auto industry.  All those cars need catalytic converters, and they all need platinum group metals.  Once that demand falls through the floor, demand for PGM’s goes south in a big hurry.  Couple that with a drop in all the metals’ prices, and you can see what happens. 

All that being said, I think platinum has a bright long term future.  Shorter term, gold and silver will fare better.  But eventually, once we’re through this economic muck that we’re in, auto sales will pick back up, and PGM’s will be needed once again.  When that happens, your platinum will begin to regain at least some of its former glory.  If you can afford to hold, but cheap while you can.