The Shein of Platinum or The Glint of Gold - Investing in Platinum vs Gold
Since ages, gold has fascinated mankind as one of the definitive and greatest precious metals. Starting from our traditional customs, culture, heritage, conventions to lifestyle, every single facet of Indian civilization has been carved by this incredibly alluring metal.
Considering its attributes, gold is undeniably an incredible store of wealth, an excellent safeguard against economic crisis or inflation and are a prime choice when it comes to long-term investment. However, the treasure trove of our planet is not just limited to this most adored metal. Apart from gold, it comprises of a myriad of highly valuable and cherished metals and among the cluster, Platinum surely shines the brightest indeed.
A Brief on Platinum
The word 'Platinum' has originated from the Spanish word 'Platina', meaning 'little silver'. Being a highly lustrous, ductile, malleable and silvery-white metal, it is one of the most minimally reactive metals and highly corrosion-resistant metals present in the Earth. As the third highest in terms of density, following osmium and iridium, its usage is not just limited to jewelry making purpose and boasts prime importance in the industrial sector for manufacturing catalytic converters, pacemakers, electrical contacts, magnets and in refining medical technology. Since it is one of the rarest metals found in the Earth (considering the fact that the total amount of Platinum reserve is estimated to be 5 parts per billion of the Earth's crust material), it tends to be extremely pricey.
Understanding the Difference between Gold and Platinum
Both gold and platinum are two high priced, highly treasured metals however vary in context to a set of significant parameters including density, color, cost, weight, composition and many more. While observing one-troy-ounce of coins made of gold with that of platinum, one will be able to decipher the fact that the platinum coins will be comparatively smaller in size, which indicates that it is denser than gold. Furthermore, 24 carat gold (considering it as the purest form) is considered to be soft and will bend easily compared to pure platinum, which can stand firm against regular wear and tear. In addition to it, let's take a dig on the Gold vs Platinum ratio for observing the relationship between prices of both the metals in detail.
The Gold:Platinum ratio is one of the efficient ways of evaluating the relation between prices of two metals. When the ratio stands above one then, it indicates that platinum is comparatively cheap than gold. While observing the historical records, we will be able to decipher that platinum is priced higher than gold. However, the case is not same every time.
A sharp-witted investor generally uses this ration for digging out profitable opportunities in choosing the right metal to invest for yielding maximum returns. The historic chart of Gold:Platinum ratio will help him to understand that the price of platinum usually do not fall on below gold prices and considering their relative availability all around the world, it would certainly be prudent enough for the investor to comprehend that any drop in platinum prices below the gold price will turn out to be a temporary one. Though the assumption might turn upside down, however, an investor can ideally expect that buying platinum at a price below gold would turn out to be a propitious investment opportunity indeed.
Though the conventional choice for investing in both these metals is jewellery buying, however, the financial market is bombarded with an array of other prospective options. Here's a brief rundown of the convenient investment options available.
Investment Options for Platinum
Investment Options for Gold
- e-Trading: With its growing popularity as an investment instrument, the e-Platinum trading platform was launched in April, 2012 by the National Spot Exchange. This avant-garde trading platform has opened an opportunity for investors in buying Platinum in units electronically with the choice of accumulating, retaining or selling physical delivery. Alike e-Gold and e-Silver, this platform will allow investors to attain physical delivery of metals in a range of denominations, generally in granules which have been improved by the approved suppliers of the Platinum and Palladium market in London.
- Bars and Coins: For the investors with the aim to store physical Platinum; bars, coins and bullions are accessible all across a number of centers including authorized dealers, nationalized and private banks. Physical delivery of the metal can be attained in various measures starting from a meager 1 gram to 100 grams while having a purity of 99.5%.
- Futures Contract: An investor can also invest in the Platinum futures market such as the Multi Commodity Exchange (MCX) that offers a range of buying facilities for futures contracts. Since the futures market is subjected to a myriad of risks and highly volatile, such kind of an investment avenue is mostly recommended for the advanced investors and traders.
Apart from the aforesaid, one can invest in Government assured investment instruments such as Sovereign Gold Bonds (SGBs), futures contracts, e-Gold and more, which can bring whopping returns if invested prudently.
- Bars and Coins: A prospective gold investment option is buying bars and coins from the jewellers and banks.
- Gold ETFs: Gold Exchange Traded Funds are a type of mutual fund that diversifies your investment. An investor can purchase this product from the Stock Exchange by opening and DEMAT and trading account.
- Gold Fund of Funds: Gold Fund of Funds or a Gold Fund invests your money in Gold ETFs and is certainly ideal for investors who do not have or not willing to open a DEMAT and trading account.
- Equity-based Gold Funds: These funds are not directly invested in physical gold but, rather invested in the companies related to extraction, mining and marketing of Gold. Moreover, the performance of this fund is directly related to the performance of fund house and equity stocks they have invested into.
The Future Perspective
Indian investors have always been fascinated by precious metals and stones because of their incredible hedging ability against economic uncertainties and inflation. Though investing in gold has become a conventional practice, another rewarding avenue of investment which, has bloomed recently is platinum. Though unlike other valuable metals, platinum does not have a rich financial trading history, however, it has gained wide popularity during the recent times. On a concluding note, investing in platinum helps investors in diversifying the investment portfolio and planning a promising and enduring investment strategy.