While not as famous as gold and silver, platinum is also a key family member of the precious metals. The primary utility of platinum is for the car industry; therefore it is highly sensitive to the overall economy. Platinum is quite rare and it is usually more expensive than gold. During the last decade, platinum has averaged a 64% premium over gold. And in the past 2 decades, platinum was traded below gold only once, which happened in Nov 2008 when everything was sold off during the overall market panic and crash. It was a historic meltdown for platinum when the auto industry, actually the whole world, was almost felt like coming to the end. It tumbled from over $2000/oz all the way down to less than $800. But you know what, in the next 2 years, platinum jumped back almost 150%.
Now we have got the second opportunity that platinum is currently cheaper than gold. Gold is trading over $1750/oz at the moment but platinum is in $1600s. If the history is any guide, this won’t last for long and I bet platinum will bounce back in the near future to cost more than gold.
If you want to invest in platinum, there are 2 ways: one is to go with the platinum ETF, symbol PPLT. PPLT should more closely reflect the price of physical platinum. The other way to trade platinum is to invest in the platinum mining company, Stillwater Mining (SWC). Of course, as with any mining companies, SWC is more volatile and risky but potentially it may be much more profitable when the platinum’s price appreciates.
Since Oct 20, PPLT has gone up from about $145 to now over 160. I would like to follow your suggestions, but right now kind hesitated to get in as its price is already high. Do you really think that it is a good time to buy in right now? Thanks a lot!
ReplyDeleteThanks for the comment. You have to look at this in 2 ways: on one hand, PPLT is till cheap relatively to gold. But on the other hand, it is indeed volatile and is prone to a drop that may not be mild. So all depending on your timeframe. If you are a long-term investor, the short-term volatility should not so concerning. But if you are a short-term trader, then it is very important to get in at a good time. But no one can really pinpoint to the exact best time. Maybe using the dollar averaging to split your risk.
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