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How To Invest in Platinum:As a precious metal, platinum was pretty much ignored throughout most of history. Sharing traits in common with gold, silver, and palladium, platinum has since come to be used in a myriad of industrial uses. The Spanish Conquistadors were the first Europeans to really "discover" platinum as they mined for silver and gold in the New World, and by the late 1700s platinum was in use around Europe. Given its rarity (about 7 million ounces are produced each year, versus 85M oz. of gold and 550M ounces of silver!), platinum is also naturally a precious metal, just like gold. As such, platinum has been used as a store of wealth and an investment vehicle in the form of bullion, coins, and jewelry. Today, the main consumer of industrial platinum is catalytic converters inside automobiles - hardly a way to invest in the metal, and it is still in very limited supply, being mined almost exclusively in South Africa (80%) and Russia (11%). In this guide, we will take a look at some of the best ways to invest in platinum, in all its forms - coins, bullion, and stocks and ETFs.
Platinum Prices - How much is platinum worth?Like most commodities, platinum is traded and priced on an ongoing daily basis. Just like you can check the price of gold on any given day, you can also check the price of platinum. Check out TheBullionDesk.com for up to date price quotes on all the precious metals, right at the top of their homepage. How has the price of platinum compared to gold historically? Platinum is priced per ounce, just like gold. Platinum was stuck in a trading range around $400 for the entire decade of the 90s. This was on par with gold until the late 90s when gold tanked down to $250 per oz. Over the last 6 years (2001-2007) gold has almost tripled in price to near $700. During the same time, the price of platinum has gone from $400 to $1300. So while they used to be worth the same, platinum is now worth twice as much as gold. If you want to invest in platinum, it's challenging to invest in platinum related stocks since most platinum companies trade on foreign exchanges. Switzerland is launching a platinum EFT in May of 2007 that will track the price of the white metal, but again, this will trade on the Swiss exchange. So your best option for investing in platinum as a small investor is probably in the form of platinum coins and bullions, widely available from precious metal dealers (see below).Where to Buy Platinum Coins and Bullion - Best Platinum DealersInvesting in platinum coins and bullion is easy, even easier these days with Internet merchants shipping around the globe. The most popular type of platinum coins are the government issue 1 oz coins, namely the US Mint Platinum American Eagle, Canadian Platinum Maple, Australian Platinum Koala, and the Isle of Man Platinum Noble Coins. One ounce bullion bars are available in both JM bars and Engelhard bars. The US Mint began producing Platinum American Eagles in 1997, but since the price of platinum has gone so high, not nearly as many investors have been buying the coins, and production has fallen from over 130K per year down to less than 10K newly minted coins per annum. The Isle of Man was actually the first issuer of platinum bullion, starting in 1983. By 1988, Australia and Canada got into the platinum games as well with their popular Koalas and Maples. While the 1 oz coin is the standard, the American Eagle, for example, is available in a number of sizes -- 1 oz, half ounce, quarter ounce, and 1/10 ounce. Prices are in direct relation to the metal content, so a 1/10 ounce platinum American Eagle will sell for 1/10 the price of an ounce of platinum. The Australian Koala platinum coins go all the way down to 1/20 of an ounce, and all the way up to 10 ounces and even a 1kg coin which had an original face value of $10,000, but which later was changed to $3000 in future mintings. So where can you buy platinum coins and bullion? You can do it locally by finding a gold and coin dealer in your area - check your local yellow pages or search online for gold dealers in your city. Smaller dealers will tend to charge a larger buy/sell spread on their coins since they don't handle as many transactions and need to turn a profit to keep their store open, pay for their kids college, eat, etc.! So if the price of platinum is $1300, they may offer to sell 1 oz coins for $1360 and buy them back at $1240. So if you plan on buying now and in the future selling back to this dealer, platinum would have to go up by $120 just for you to break even on the buy and sell spreads. The Internet gives you access to a lot of larger coin and bullion dealers with smaller pricing spreads. Since most dealers are in business to sell inventory, they tend to have a lower markup on the sale price than they do when they are forced to buy back coins from you. For example, NWTMintBullion.com, with a closing future price on platinum of $1295-$1300, was charging $1320 to sell and $1265 to buy platinum bullion. Northwest Territorial Mint has been in business for more than 20 years, and they not only deal in government issued coins and bullion, they also are an actual mint, creating custom commemorative coins for the military, police and fire departments, and more. They also offer a free Investor Guide for Precious Metals - you can request it at their website. They carry all the most popular platinum coins for sale, and they also buy back bullion. Our only complaint - they don't accept credit card payment due to the 2-3% transaction fee charged by credit card companies that cuts into their margins. Instead, they require payment by personal checks, bank checks, wire transfers, or money orders, and nothing is shipped until the check clears. This is common with many of these dealers, though we have purchased gold Eagles in the past via credit card over the phone, much more convenient. Overall, still recommended.
Next, check out American Precious Metals Exchange, APMEX.com. They also actively buy and sell platinum and gold products and recommend investors hold 10-20% of their assets in precious metals. In terms of platinum, they offer US Platinum Eagles, Canadian Maples, and Chinese Pandas (these are in very limited supply, and carry a couple hundred dollars premium), along with Engelhard, JM, and Credit Suisse platinum bars. Another reputable dealer is Monex.com, dealing in gold, silver, platinum, and palladium. They sell the Maples, Eagles, and 10 oz. bullion.
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