The White Metal: PLATINUM

 

The White Metal: PLATINUM

Investors are well-acquainted with the allure of gold as a store of value, but there's another precious metal that often goes overlooked—platinum. Often described as "The White Metal," platinum is an extraordinary asset with unique investment potential. It's not only thirty times rarer than gold but also boasts compelling supply and demand dynamics that set it apart as a lucrative investment option.

Investment Merits of Platinum:-

Historically, precious metals have been an essential component of diversified portfolios, serving as both safe-haven assets and hedges against inflation. While gold is the traditional favorite in this category, platinum presents a compelling alternative. It has been proven to enhance the effectiveness of precious metal allocations in portfolios by offering long-term diversification benefits.

Remarkably, even a modest inclusion of platinum, as low as 5%, in a gold-focused portfolio over the three decades would yield superior risk-adjusted returns. The unique characteristics of platinum make it an invaluable addition to an investment portfolio.

Platinum's Unique Qualities:-

Platinum's distinctive physical properties set it apart from other precious metals. This dense, malleable, and ductile metal can be fashioned into intricate shapes without losing its durability. To put its remarkable malleability in perspective, one gram of platinum can be stretched into a wire over a mile long. At the same time, it weighs much heavier; a six-inch cube of platinum weighs as much as an average human being.

Platinum Demand:-

Approximately 75% of the world's platinum is mined in South Africa, with Russia being the second-largest producer. Canada, the U.S., and Zimbabwe also contribute to global platinum production, albeit in smaller quantities. Interestingly, platinum is often a by-product of nickel mining, making its supply even scarcer in comparison to gold.

Platinum's demand emanates from four key sectors:

1. Automotive: Platinum plays a crucial role in controlling harmful vehicle emissions through catalytic converters. Emerging market demand for automobiles, coupled with stricter global emission standards, ensures robust growth potential in this sector.
2.  Industrial: Platinum has a broad spectrum of industrial applications, from biomedical devices to glass fiber and jet engine blade manufacturing. Its growth is intrinsically tied to global economic development.
3. Jewelry: Platinum has firmly established itself as the premier jewelry metal, with significant demand in regions like India and China.
4. Investment: Investment avenues for platinum include ETFs, accumulation plans, and physical bullion like bars and coins. Notably, the World Platinum Investment Council (WPIC) actively promotes platinum as an investment asset, enhancing market efficiency and expanding distribution channels.

 

Factors Affecting Platinum Prices:-

Several factors influence platinum prices, including:

1. Diesel: The decline in diesel car demand impacts platinum due to its use in catalytic converters for diesel engines.
2. Trade Wars: Trade disputes can disrupt industrial demand for platinum, affecting its price.
3. Hydrogen Technology: Growing investments in hydrogen fuel cells, which require platinum, can boost demand.
4.  South African Issues: The precarious state of South African platinum mines can reduce supply, potentially raising prices.
5. Scarcity: Platinum's rarity, even compared to gold, suggests a long-term upward price trend.

 

How to Invest in Platinum:-

There are various ways to invest in platinum globally:

1. Physical Bullion and Coins: Investors can purchase platinum bullion and coins through banks and authorized dealers, ensuring high purity and quality.
2.  Futures Trading: Platinum futures contracts are available on commodity exchanges for more active traders, but they entail higher risk.

The Future of Platinum:-

Given its current price, investment potential, and diverse industrial applications, platinum presents an attractive opportunity. Recent years have witnessed platinum becoming more affordable relative to other precious metals, making it increasingly popular. The emerging trend of platinum jewelry in the West is likely to drive its demand even higher, including in India.

As platinum's price remains below historical averages, many investors are recognizing its value. With its scarcity and versatile utility, platinum could potentially shine even brighter in the world of investments.

Author

Ajit Singh

Founder

Graded Financial Services | Quick Turtle | AskCred

Management Consultant | Trainer

 

 

Gold: A Timeless Treasure

 

Gold: A Timeless Treasure

Few elements have captivated the human imagination as gold has. In ancient Egypt, it was revered as divine and indestructible, believed to be a physical embodiment of the Sun itself.

Long before the advent of modern currencies like the dollar, euro, yen, or peso, gold reigned supreme as the world's de facto currency. The first gold coins were minted in 550 B.C.E., and well into the 20th century, modern paper currencies were backed by the "gold standard."

Even today, gold retains its allure as the ultimate "safe haven" commodity. It is tangible and resilient, retaining its value when compared to "paper" investments like cash, stocks, and bonds.

How Much Gold Remains?

According to the US Geological Survey, underground gold reserves are currently estimated at around 50,000 tons. While this figure is subject to variation, it suggests that approximately 20% of the world's gold remains to be mined, a process that could take up to two decades.

Nonetheless, the depletion of easily accessible gold reserves doesn't necessarily spell the end of gold mining. Ongoing research and the introduction of new technologies may open up previously untapped resources, although mining costs may rise significantly. Should gold become scarcer, its market price could skyrocket.

The following countries boast significant gold reserves:

Australia: 10,000 tonnes (19% of the total)

Russia: 7,500 tonnes (14%)

U.S.: 3,000 tonnes (6%)

Peru: 2,700 tonnes (5%)

South Africa: 2,700 tonnes (5%)

Rest of the World: 27,100 tonnes (51%)

These reserves not only dictate current production but also hint at future potential mining locations.

 

Prospects for Future Gold Mining:

Surprisingly, the sea contains approximately 20 million tonnes of gold. However, the challenge lies in the fact that gold is incredibly dilute in seawater, with just billionths of a gram in an average liter. Extracting this gold from the sea remains a formidable task.

On land, experts estimate that the top four kilometers of Earth's crust contain as much as 122 billion metric tons of gold, not accounting for what lies beneath the oceans. If new technologies allow for the profitable extraction of gold at lower concentrations, the world may possess more gold than initially thought.

Beyond Earth, asteroids in the Asteroid Belt could potentially contain substantial amounts of gold in their cores, though the feasibility and cost-effectiveness of extracting this gold remain distant prospects.

 

Who Holds Gold?

Gold is coveted by investors worldwide for its ability to preserve value, particularly during times of high inflation. Investment accounts for a significant portion of gold's use, with over 44,000 tonnes held as bars, coins, or bullion in gold-backed exchange-traded funds (ETFs).

Central banks are also major gold holders. Unlike other assets like foreign currencies or equities, gold's value depends on supply and demand dynamics. Therefore, central banks often use gold to diversify their assets and safeguard against fiat currency depreciation. As of 2021, central banks held more than 35,000 tonnes of gold, accounting for nearly one-fifth of all above-ground gold.

Gold isn't just a financial asset; it plays a crucial role in various industries, including electronics, dentistry, and space exploration. For example, a typical iPhone contains around 0.034 grams of gold, along with other precious metals. These industrial applications make up approximately 15% of all above-ground gold.

A Golden Future

Gold has stood the test of time, and it's likely to do so in the future due to its indestructible nature. This enduring quality, coupled with its rarity and inability to be artificially produced in large quantities, makes gold a valuable and essential investment.

With growing concerns about money supply expansion and inflation, gold will continue to deliver value and offer a safe haven for investors during times of volatility. It remains a reliable means of preserving wealth for the long term.

 

Author:

Thakur Ajit Singh
Founder - Quick Turtle | Graded Financial Services | AskCred
Financial Expert | Trainer | Management & Placement Consultant
Cell: 8169810833