Investing In Platinum
The uses of platinum are expanding on a daily basis. Studies estimate that one in five of all goods manufactured either contain platinum or need platinum for their production. One of the biggest users of platinum is the automobile industry where platinum is used in catalytic converters to convert harmful engine emissions into carbon dioxide and water. This alone accounts for the consumption of nearly one third of all platinum produced in the world each year.
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.
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