Investing In Platinum. Better than Gold?

Platinum is a scarce precious metal, but how does it compare in investment terms to similar metals such as gold and silver?

The most common use for gold is the jewellery market, with roughly 20% of the world's gold supply going into rings, bracelets etc. Platinum on the other hand is used more widely in industrial applications.

This makes the price of platinum fluctuate more in sympathy with the general state of the economy. When industrial output is lower, the demand for platinum decreases and so does the value.

With these factors in taken into account, platinum will always be a scarce resource and hence, prices will tend to rise over time.

Different Ways To Invest In Platinum

The easiest and most accessible way for anyone to invest in platinum is to buy bullion in the form of coins ( or ingots for the wealthy).

Another way to invest in platinum, without the hassle and rik of storing valuable bullion is by buying into a platinum ETF. These are funds based on the market value of platinum, and can be bought and sold like shares.

If you want to take things a step further you can invest in platinum mining companies by buying their shares. This is only advised for the experienced investor.

Platinum is an extremely scarce commodity and is deemed a precious metal. When platinum is in it's bulk form it's known as bullion. Buying bullion is the most direct way of investing in platinum as you own the physical resource. Bullion can be melted into an 'ingot' or minted into coins.

The first legal tender platinum coin was released in 1983 in Isle of Man, UK. Since then other mints around the world have made different platinum bullion coins, most notably the Canadian Maple Leaf coin from the Royal Canadian Mint.

Following the success of this and others such as the Australian Koala Platinum, investment demand in platinum bullion coins has increased considerably and is now very popular.

Platinum bullion coins are legal tender and will have a nominal face value. The actual value is determined by the weight of pure platinum in the coin and far exceeds it's legal tender price. For instance a $100 2008 American Eagle Platinum coins are selling between $2000 -$4000 on Ebay.
Limited edition bullion coins such as these have added value and become collectible, pushing the price even further.

If you don't want to buy into bullion or you don't want to start trading in complicated stocks or futures, an ideal alternative is a Platinum ETF.

What is an ETF?
An ETF is a low-cost index fund that can be traded on the open market like stocks. ETFs have seen a huge rise in popularity since their introduction in 1993. Exchange traded funds track an enormous variety of stocks, bonds, commodities and currency indexes.

ETF's are an easy and in-expensive way for normal consumers to invest in commodities that would normally be too complicated or expensive to consider. A platinum ETF is an exchange traded fund that is designed to track the price of platinum. Platinum ETFs are insured by being backed up by stocks of platinum bullion.

A platinum ETF enables you to have exposure to the price of platinum without having to physically own any bullion. ETF's are easy to buy into and each 'share' will give you ownership of a specific amount of platinum. Each ETF transaction carries a small commission.