Best Way To Buy Platinum
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Thus, the metal is quite scarce, which makes it valuable. And unlike gold, which is used relatively little in industrial applications, platinum has a huge amount of industrial demand which helps prop up its price.
Disclaimer: This page is intended for informational purposes only. It should not be considered as financial or investment advice. You should speak to a certified financial professional to determine the best investment mix for your specific situation.
Today, platinum is popular among precious metal investors. Even so, platinum investment makes up less than 10% of annual demand for the rare metal. The bulk of demand comes from autocatalyst use in the automotive industry (40%), jewelry (30%), and industrial (20%), based on 2016 data.
That said, platinum appears to be undervalued currently, which has convinced a lot of investors to jump into the mix. Investors also appreciate that the metal has relatively stable industrial and jewelry demand, which helps to support price levels.
Moving forward, platinum has both positive and negative catalysts from an investment standpoint. On the plus side, jewelry and industrial demand is fairly steady, overall demand typically exceeds supply, known stores of platinum are very small, and the metal is very expensive to mine.
Perhaps the best way to invest in platinum for retirement is through a self-directed IRA program. These programs let you invest in physical platinum bullion, while getting the same tax perks as a normal IRA retirement account.
Investors buy platinum because of its physical rarity and unique value to technology. How and where you buy platinum will decide your costs and potential gains. Choosing the simplest, most cost-effective way to buy could save you 30% or more of your original outlay when you come to sell versus small platinum bars or coins.
Buying platinum is a relatively new investment choice, especially compared with the 5,000-year history of gold and silver jewellery, bars and coins. It also remains a less common investment, taken by far fewer investors. Investment demand for physical platinum matches just one-tenth the value of silver investing each year. It equals less than 1% of investors' demand to buy gold.
Buying platinum coins or small bars brings the same problems as buying retail products in gold. Manufacturing and shipping means they cost far more per gram than the underlying 'spot' price. Keeping them at home, you then risk voiding your contents insurance unless you declare your precious metals and pay increased premiums each year.
There is a cheaper way to buy platinum. It enables you to keep it safe at very low cost, and sell it the moment you wish for full value. BullionVault began changing how private investors buy and sell gold over a decade ago, giving them direct access to the professional wholesale market and cutting their dealing costs by four-fifths. Silver was added to its choice of global vault locations in 2010. Today BullionVault users own $3.8 billion of precious metal between them.
With industrial, chemical and technological uses dominating the market, that leaves just 7% of annual demand coming from investors wanting to buy platinum over the last 10 years, way below the average figure for gold (40%) or silver (21%).
That hasn't stopped platinum prices reacting to sharp inflows of speculative money. Investment buying saw platinum jump 330% between 1977 and 1980, when the metal averaged $677 per ounce. That beat gold (up 315% in 3 years) but not quite silver (up 350% on its annual average) as the 1970s' inflation crisis peaked.
Over the following 5 years, platinum prices averaged 73% of their peak, almost as stable as gold following its 2011 top and much firmer than silver, which halved on average over the half-decade to 2016.
Compared to gold prices, platinum has been at a discount to the less industrially useful metal on just four occasions during the past 40 years. The current period, its longest ever, is increasingly difficult to square with five consecutive years of demand outstripping supply. Investors who have not previously considered buying platinum may see this as an opportune entry point.
Altogether, demand to buy platinum jumped 5-fold between 1960 and 1990, led by surging industrial and then autocat use. Mining output rose to meet it, helped by more efficient mining techniques and also by prices rising over 500% in US Dollar terms on an annual average basis.
Mine output continued to rise as demand growth steadied at the turn of the century, but it has struggled over the last decade. Peaking in 2006, annual output was 25% lower in 2014, when cost-cutting by platinum producers coincided with strike action by mine-workers in South Africa, blocking three-quarters of the world's new mining supply.
Like gold, platinum accounts for just 5 parts per billion of the earth's crust, but it tends to be more concentrated. That makes mining deposits harder to find. On current estimates, geological reserves of platinum equal just 1/8th of the world's unmined gold. Some 80% of that metal sits inside the Bushveld Complex in South Africa, now one of the most costly countries for gold mining. The world produces more crude steel every 4 seconds than it mines platinum each year.
Jewellery remains the most popular way for people to buy platinum today. But as with gold or silver bracelets, necklaces and rings however, this doesn't offer an efficient way to invest, because the extra cost of making each item far outweighs the value you get back on re-selling. Unlike gold, where a large portion of Asian jewellery demand uses the precious metal as a way to store value, there is very little platinum jewellery purchased solely as an investment. The Kihei chain sold in Japan is probably the only jewellery product in platinum that is close to being an investment product.
Small units of platinum bullion carry the same problem. Each gram or ounce you buy as a platinum bar or coin will carry much higher manufacturing costs than the large wholesale bars traded in the global market. Greater manufacturing, shipping and handling costs add to your purchasing price too. Again, you won't get all of that money back when you come to sell.
In the US, retail premiums on platinum coins typically run from 5-9%, rising to 7-15% in Germany and 10-20% in the UK. As the number of platinum products in the market increases some of this premium may fall but it is highly unlikely to ever get close to BullionVault's low costs.
In the UK and Germany, buyer's premiums start around 8%. On top you must also pay VAT if you wish to take personal possession of physical platinum, or store it outside the care of an accredited wholesale-market participant. VAT runs to an average 22% across the European Union. So the underlying price of platinum itself needs to rise by 30% or more before you get back to break-even.
Now think about storage. How will you keep any platinum coins or bars you buy secure Storing them at home may sound simple at first. But check the terms of your home contents insurance policy. You will probably need to buy and install a good safe, meeting insurance-industry standards. You should probably also declare your bullion to your insurers. Otherwise you risk invalidating your policy if you don't mention these 'high value' items specifically.
You also need to check that the market-price of your platinum doesn't rise above your insurance policy's limit for high-value items. Because again, you risk voiding your policy if you breach its terms. So you will need to contact your insurers and raise that limit. That in turn will likely raise your insurance costs.
But in platinum coins and bars, shopping around is much harder when you want to exit your platinum investment, because you'll find fewer retailers willing to quote you a re-purchase price than in gold or silver.
Professional traders don't put up with wide dealing spreads, VAT sales tax, worries about storage, high insurance costs or a lack of buy-back quotes. The wholesale market is where the 'spot' price of platinum is created. BullionVault enables you to join it simply and quickly online. The cost savings are dramatic.
Using BullionVault to buy platinum, you'll benefit from the low costs and high security enjoyed by miners, refiners, banks, brokers, industrial users, jewellers, auto-makers and technology companies. Like them, you will buy and sell platinum held in large bars, all meeting the 'Good Delivery' standards of professional trade body the LPPM, and all stored in approved, specialist vaults.
The Good Delivery rules allow these bars to weigh from 1 to 6 kilograms (32 to 193 ounces). New bars today typically come around 5 kilos (155 ounces). That would cost far beyond the resources of most private investors. But on BullionVault, you can buy or sell as little as 1 gram at a time, holding your platinum as part of an undivided large bar. This way, you own your metal outright, but you benefit from the wholesale market's much tighter spreads between prices to buy and to sell.
Buying platinum in Good Delivery bars also makes it much simpler and cheaper to store and insure. Starting from 1 gram at a time, BullionVault enables you to share these benefits too, enjoying fully insured storage inside specialist vaults recognized by the professional market's biggest players.
Platinum is also perfect for collectors and investors on a practical level. This metal resists corrosion, and far less than most of the already-limited precious metal goes to coin production. While the platinum metal market can be volatile, the value of platinum tends to follow a few different trends. If the automobile industry is up, platinum is sure to follow. If platinum prices decrease, however, most platinum mining will decrease, resulting in even less coins being made. While platinum would make a great portfolio diversifier for those interested in staying in the precious metals market, it may be best to use it only as an addition to your gold and silver investments. 59ce067264