57. Is platinum an alternative to gold investments?
History of platinum
Around 1500 BC, platinum is first mentioned in writings. It is now known that it has been used for this purpose in America for a long time by its original inhabitants. Platinum was first described as a miraculous metal that could not be melted down and was found in Panama and Mexico.
Originally, the Spaniards used the name platino, which means silver. This name is derived from the fact that it was considered an undesirable bycatch when mining for silver.
In the 18th century, platinum was discovered as a chemical element during a geographical mission to Peru.
What is Platinum? Platinum is often used for industrial applications and in jewellery. Platinum is pliable and malleable and has a beautiful white-gray sheen. In addition, it is highly resistant to corrosion caused by, for example, cyanides, halogens and sweet and sour. Platinum does not oxidize in air.
The only acid platinum can withstand is royal water. This can also be used in the refining of platinum. The refining of platinum is a slightly more expensive process than with gold.
Because platinum is also resistant to high temperatures, platinum is frequently used for a temperature sensor, for example.
Applications of platinum include:
- use in jewelry
- in the production of fertilizers or explosives
- in pacemakers and other surgical implants
- as a temperature sensor
- as a thermocouple where it is combined with Rhodium and is suitable up to temperatures of 1800 degrees Celsius.
Physical Properties of Platinum
Hardness (Mohs): 4 - 4.5
Melting Point (C): 2.318
Boiling point (C): 4.716
Density (kg): 21,450
Platinum as an investment
In the meantime, platinum is increasingly used as an investment metal. A number of things are important when choosing to buy platinum:
1. Subject to VAT;
Like silver bars, platinum is also seen as an industrial product. As a result, the state has chosen to keep platinum subject to VAT. In the precious metals industry, this is regretted because platinum is increasingly used as an investment and could be regarded as a VAT-free product, just like gold. Unfortunately, the government does not share this opinion and this does not seem to change in the near future. This ensures that 21% VAT must always be paid when purchasing platinum. These are transaction costs that can be included in the considerations.
2. Platinum Price Characteristics;
The price of platinum can fluctuate greatly, both in the short term and in the long term. As a result, the height of platinum relative to gold can vary greatly. As a result, platinum is worth less than gold one moment and more the next. Looking at history, the platinum price also seems to be more comparable to silver than to gold. This can be explained by the fact that silver, like platinum, is also an important industrial product and somewhat less active in the monetary market.
3. Platinum properties;
Platinum is significantly more difficult to work than gold. If a bar has to be refined or analyzed for content, this entails more costs than with gold. As a result, it can happen that a platinum bar is slightly less valued on the second-hand market. This can largely be compensated for by ensuring that platinum is purchased from Good delivery brands, such as Heraeus. Another option is to buy platinum coins minted by official mints such as Perth Mint.
4. Supply of Platinum;
In general, the supply of platinum within the precious metals industry is smaller. Not all parties offer these precious metals and the premiums may be a bit higher as a result. The latter is reinforced by the fact that the manufacturing costs are higher. In the first half of 2013 there was a lot of commotion about the platinum mines in Africa. Miners have rebelled against low wages, causing several uprisings and temporary closure of some mines. This has put pressure on the platinum price.
5. Demand for platinum;
Worldwide, there is an increase in the demand for platinum. A major cause of this is the demand from China, India, Russia and Brazil.
Ultimately, the purchase of platinum will depend mainly on the investor's personal view of this precious metal.
Purchase platinum
There are several methods to buy platinum. Below, we divide this into four groups:
1. Buy Physical Platinum
Platinum can simply be purchased in the form of coins or bars. There are a few parties in the Netherlands that offer this possibility.
2. Buy platinum in a safe
Platinum can also be purchased physically, where it is stored directly in a vault. This means that you do not have the platinum in your own hands, but it is stored safely and insured. There is even the possibility to purchase it VAT-free in a bonded warehouse. The disadvantage of this is that if you want to have the platinum delivered, you still have to pay the VAT.
3. Book-entry platinum account
At some banks there is the possibility to open a platinum account, with which platinum can be purchased. In this case, the platinum is no longer physically covered with platinum bars as used to be the case with the HBU.
4. Investing in mines
As with gold and silver, it is also possible to invest in the precious metal mines with platinum. This is used to buy shares of these mines. The development of these shares is not directly synchronized with the platinum price. Several parties opt for such a diversification by investing shares in mines as well as in physical platinum.
The larger mines are often listed on the American, Canadian, South African or Australian stock exchanges.
