Platinum Vs Gold As An Investment

by JasonLast updated May 4, 2021Category: Investments

Compared to gold, platinum is a relatively new investment option. The use of gold as a financial instrument dates back to 550 BC, where they were struck on the order of King Croesus of Lydia. Meanwhile, it wasn't until the late 1820's that Russia first began to issue platinum coins as a form of currency. Today, both metals are popular as both financial instruments and for jewelry production. But which one is the better investment? To figure that out, we have to analyze the supply, demand, and other factors for both.

Platinum & Gold Supply

Platinum is a scarce metal, even when compared to other precious metals. New mining productions for the metal were only approximately 5 million troy ounces a year. In comparison, new gold mines productions were approximately 82 millions ounces. It's also buried deeper in the earth, making the mining process more expensive than for gold. Once dug up, it's more difficult to purify, making it less appealing for mining companies as an investment. Because of this combined with the metal's rareness, only 190 metric tons of platinum is mined yearly. This is compared to gold, where in 2019, 3,463 tons of gold was mined.

Platinum & Gold Demand

In terms of physical demand, the demand for gold is far greater. While platinum is becoming a more popularized financial instrument, gold has been around much longer. And with the recent world-wide pandemic, gold has gained even more popularity. This is because it's seen as a safe haven against poor economic conditions. In stark contrast, platinum tends to under perform in the same conditions, but does fair better in a bullish economy. In terms of demand for jewelry, platinum has gained popularity in North America, where it's seen as a more premium metal. But in other countries, such as India and China, gold remains the most sought after metal for jewelry. And because of this, the demand for gold is much higher overall.

What does this all mean?

So which one is a better investment? Gold has both a higher demand and supply, and performs better in poor economic conditions. Meanwhile platinum has both a lower demand and supply, but performs better in a strong economy. Our choice would be to dump the platinum and invest in gold. While we're slowly getting out of this pandemic, we're not there yet. We still have yet to see the full economic effects, which can lead to gold reaching new highs again. And even if the economy does improve, there are better investments. While both metals are safe investments, you'll only need the security if you expect that the economy will worsen. And if it does, gold will always outperform platinum.

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