Platinum
Platinum Returns vs S&P
-3.10%
Versus S&P
•
4 hours ago
-3.10%
Versus S&P
•
4 hours ago
6m High
6m Low
Platinum
$97.99
$83.19
S&P 500
5,762.48
5,186.33
Platinum
S&P 500
Does not follow the stock market
Sources: PPLT, SPX
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Highlights
Good For
Earning on price appreciation, if you can time your investment well
Time Horizon
Short to medium term
Diversification
Environmentally Friendly
Platinum, like other precious metals, is often used by investors to diversify their portfolios and hedge against inflation and market downturns. While it gets less attention than gold and silver, it has some particularly effective diversification benefits that its metal siblings don't. For one, its correlation to the S&P 500 is significantly lower than that of both gold and silver. And while the price of platinum has been below gold for the last decade, it's historically been one of the most expensive metals. The price of platinum is largely reliant on demand in a few key industries—namely the automotive, electronic and medical industries—and the supply of platinum is particularly scarce. This can be good or bad for investors depending on the future of these key industries.
Did you Know
Platinum is one of the rarest metals, far rarer than gold, which is why it's been termed "rich man's gold." The price of platinum has fallen significantly in recent years, leading many experts to speculate that the metal is currently extremely undervalued.
The majority of global demand for platinum (60%) comes from the automotive industry's production of catalytic converters. Jewelry makes up just 9% of the demand for platinum.
After Russia and South Africa, Zimbabwe is the third-largest producer of platinum in the world, followed by Canada. It's estimated that over 90% of the world's reserves of platinum group metals (PGMs) are located in South Africa.
Considerations
Platinum is a versatile metal with a variety of industrial uses, meaning demand is driven by much more than just investor sentiment.
Due to its extreme scarcity, platinum is a high-value asset—historically, it has often traded at even higher prices than gold, and may currently be undervalued.
Its low correlation to the stock market makes it a great way to diversify.
Reasons to Invest
It's more volatile than many other assets (including gold)—price fluctuations in platinum are frequent and can be hard to predict.
The price of platinum has been falling for the last decade, largely due to decreasing demand in the automotive industry.
It's significantly less liquid than other popular precious metals like gold.
Drawbacks
How You’re Taxed
Income Tax
Capital Gains
Precious metals are taxed as collectibles, which means that any capital gains earned from the sale of platinum that was held for longer than one year are taxed at a rate of 28%. This includes platinum and precious metals ETFs. If the platinum you sell was held for one year or less, your capital gains are considered short-term and thus taxed at regular income tax rates.