Investing in platinum and palladium may not be as familiar to previous metals buyers as investing in gold and silver. While humans have mined and traded gold and silver for thousands of years, platinum and palladium have had a much shorter history. Platinum was discovered in 1735, while palladium wasn’t discovered until 1803.
However, in recent decades, platinum and palladium have become desirable commodities thanks to their uses in the electronics and the automotive industry.
Many precious metals investors are keen to learn how to invest in platinum and palladium efficiently and successfully. In this platinum and palladium blog, we’ll cover how to invest in these precious metals and provide tips for investors.
Platinum and Palladium: The Basics
Platinum and palladium are two of the rarest metals on Earth. They’re both part of the platinum group metals family, which also includes iridium, osmium, rhodium, and ruthenium.
Platinum is a silvery-white metal that appears similar to silver. However, platinum is much shinier and brighter than the better-known metal. Also, unlike silver, platinum is resistant to tarnish and is harder and more durable.
Palladium is also a white metal but is even rarer than platinum. It’s commonly extracted as a byproduct of platinum mining.
Palladium is also resistant to tarnish, but it’s less dense than platinum. As a result, when it comes to platinum vs. palladium, palladium is the less durable metal.
As with gold and silver, there are several different methods for investing in platinum and palladium. These rare metals can be purchased in physical bullion form or through exchange-traded funds (ETFs). Some precious metals investors also gain indirect exposure to these metals by buying platinum and palladium mining stocks.
Uses for Platinum and Palladium
Platinum has myriad uses. Due to its brightness and durability, platinum is a popular choice for jewelry — particularly wedding rings. However, the precious metal is most in demand by the automotive industry for catalytic converters, temperature sensors, and spark plugs, among other car components.
The electronics industry uses platinum in optical fibers, liquid-crystal display (LCD) screens, computer hard drives, circuit boards, electrode coatings, and many other applications.
The rare metal is also in demand by the healthcare and dentistry industries due to its hypoallergenic properties.
Palladium can also be used in many ways as well. Like platinum, it’s a main component of catalytic converters (many converters contain both metals along with rhodium). Its ability to absorb hydrogen also makes it useful for hydrogen fuel cell technology.
The healthcare industry uses palladium for dental devices and surgical instruments, as well as for blood sugar testing strips.
Palladium’s use in jewelry is also gaining in popularity, and the precious metal is commonly used for making watch parts.
Platinum and Palladium Market Trends
Due to their scarcity, platinum and palladium have both historically been more expensive than gold. However, the prices of precious metals have been volatile in recent years. Recent economic and geopolitical events have led many investors to turn to gold as a safe haven.
The price of gold most recently overtook that of platinum and palladium in 2015. At the time of writing, the spot price for an ounce of gold is above $2,440. By comparison, the spot price for an ounce of platinum is around $980. Palladium is currently valued at around $940 per ounce.
Recently, palladium and platinum market trends have shown the prices for both precious metals inching lower. This can be attributed to a decrease in demand for the two metals as the global automotive industry shifts gears to electric vehicles, which do not use catalytic converters. Still, the industry shift to electric vehicles could change gears again.
However, both metals still have many other uses in the tech and healthcare industries. These industries are likely to pick up the slack in demand.
In general, demand for platinum and palladium is expected to increase in the coming years, potentially leading to higher prices. Some analysts are expecting the spot price for platinum to reach as high as $1,200 per ounce by the start of 2025. Palladium is similarly forecast to rise above $1,000 per ounce.
It’s important to note that platinum and palladium are more volatile in price than gold and silver. Investors should always exercise caution when investing in them.
Potential Benefits of Buying Platinum and Palladium
Precious metals investors may want to consider an investment in these rare metals for several reasons:
- Portfolio diversification: Platinum and palladium make a great complement to the gold and silver in your precious metals portfolio. Because the prices of these two metals often move in different directions from the more popular precious metals, they can help you hedge against drops in the value of gold and silver.
- Demand potential: Although demand for platinum and palladium has decreased slightly in recent years, there’s still a growing list of uses for the two metals.
- Scarcity: Platinum and palladium are among the rarest metals on Earth. That makes them desirable commodities. For the savvy investor platinum and palladium could be an excellent long-term investment, especially when their price is less than that of gold.
Risks of Purchasing Palladium and Platinum
No investment is completely risk-free. Here are some considerations to keep in mind before buying platinum and/or palladium:
- Market volatility: The platinum and palladium markets are more volatile than those of gold and silver. Investors should know that it’s possible to lose money on these investments.
- Illiquidity: Compared to gold and silver, it may be harder to find a buyer for platinum and palladium when you wish to divest. However, keep in mind that precious metals should be invested in for their long-term wealth benefits rather than for quick trades.
How To Invest in Platinum and Palladium
The first step in buying any precious metals, including platinum and palladium, is to determine whether you wish to take physical possession of the precious metals by purchasing platinum and palladium bars, coins, or even jewelry or by investing through ETFs (exchange-traded funds) or mining stocks.
If you decide to add physical metals to your portfolio, the next step is to find a reputable dealer that you trust. It’s worth performing due diligence and checking out verified customer reviews and shopping premiums in making the choice.
You can then purchase the metals online or in person (depending on your dealer). The purest platinum on the market is typically labeled as .9995 fine, while palladium should be .999 fine.
It’s also critical to safely store your precious metals investments. The most secure options include bank safety deposit boxes and professional bullion storage services.
Platinum and Palladium Buying Tips
Here are some palladium and platinum investment tips for new buyers:
- Invest in gold and/or silver first: The values of palladium and platinum tend to be more volatile than those of gold and silver. In addition, because they are so thinly traded, the costs of buying and selling these platinum and palladium can be higher than with gold and silver. Therefore, they serve best as a complement to these other precious metals rather than as the only bullion in your portfolio.
- Know the markets: Savvy investors understand the factors that affect the prices of platinum and palladium. One of the best pieces of platinum and palladium investment advice is to understand how supply and demand, government regulations, and even changing uses for these metals can affect their values.
Start small: Although it’s tempting to dive into any investment headfirst, it’s prudent to start with a small investment in either or both metals. This way, you can get a first-person view of how the platinum and palladium markets work before investing more money into these often volatile assets. - When in doubt, ask: If you have any questions about investing in these precious metals, feel free to seek advice from an industry expert or advisor.
Take the First Steps
If you decide that investing in these rare metals is right for you, keep these palladium and platinum investment tips in mind and take the first steps.
If you’re interested in investing in precious metals, call us to learn more. We’re happy to help.
