The following is a guest post on the benefits of investing in platinum vs. gold…
We’ve all heard that precious metals can be great investment instruments, and most of us have heard that you should invest in gold to protect yourself from an advisor or TV analyst. But what about other precious metals like platinum?
While you may be tempted to go the “safe” route and invest in gold like most other investors, consider using a contrarian strategy and opting for platinum instead. The following are some investment advantages that platinum has over gold:
Investing In Platinum Vs. Gold
Industrial Uses Driving Demand And Price
Platinum is used in a variety of industries, and thanks to its physical properties scientists and manufacturers are continually finding new applications for it. Although gold has a few industrial applications, it is nowhere nearly as important as platinum when it comes to functional uses.
Conversely, gold‘s demand stems largely from the fact that it is an appealing protective instrument that can be used as backup currency in times of economic turmoil. Platinum is also rarer than gold. This rarity combined with the ever-rising demand caused by its industrial presence makes platinum bullion a more appealing option to many experienced investors.
More Long-Term Potential
During the past ten years the price of platinum has averaged at about $420 per ounce higher than that of gold. Most analysts expect the gold price to peak within the next 2-10 years. However, there is no such expectation for platinum, as its value could continue to rise dependent on how many industrial applications it is used for in the future.
Although we can’t make exact predictions, some things are certain — hospitals will continue to use platinum wire in surgical and diagnostic equipment, the aerospace industry is going to continue buying platinum, automobile manufacturers will probably continue to use platinum in catalytic converters, and the unique properties of platinum will see it being used in an ever-growing number of applications.
Investing In Platinum Vs. Gold: Lower Premiums
The premium is the mark-up above the current spot price (base value) that you pay when buying bullion of any kind. Premiums on gold have been as high as $50 above spot price recently, while platinum futures are carrying premiums of around $7. Lower premiums ultimately equate to higher profits, especially if you’re investing in bulk.
Although it is certainly possible that platinum premiums will continue to rise with demand, it will take a while for them to get to the level that gold premiums are at.
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