Historically speaking, the price of platinum has nearly equalled or been multiples higher than the price of gold. For example, in 2008, the price of platinum pushed up to more than $2,100 per ounce while gold was trading around $900 per ounce. It wasn't until 2014 that the price of platinum fell and stayed below the price of gold. In the recent gold high in 2020, it traded at $2,000 per ounce while platinum traded in the mid-$900's.
Platinum is undervalued relative to its other precious peers, and this gold-to-platinum ratio seems like good timing for investors that are looking to move funds into historically lower valued assets. At a time when the price of everything is rising, platinum still looks very affordable when comparing it to gold and its own historical price track record, especially given the short, medium and long-term demand upside from its industrial uses.
Very Little Supply, Big Demand
The other major factor that drives investors into platinum is supply and demand. Compared to other precious metals, platinum is very scarce; it is 30 times rarer than gold. Around 6 moz (190 metric tons) of platinum is mined worldwide each year, compared to 113 moz (3,500 metric tons) of gold.
Platinum Demand
Platinum is a multi-use precious metal that is needed in many industries. Demand growth in the near term is coming from the automotive sector, as platinum is being used in autocatalyst systems in place of its more expensive sister metal palladium; it can replace palladium on a 1:1 basis. Global net zero targets and the growing hydrogen economy, including fuel cells, are also good news for platinum demand.
The Premium Delta
When one considers investing in precious metals, there's a conversation to be had about premiums. Premium prices are usually more expensive whenever purchasing platinum bullion. However, the same holds true when investors want to sell physical bullion back into the market. Because platinum is more scarce and hard for bullion dealers to keep in stock, they are willing to pay a higher per ounce premium for platinum products vs gold.
Scarcity and constant demand create a good equation for investors looking for long-term potential upside. SD Bullion is excited to offer the highest of quality platinum bullion products at low prices to our customers. We insure and ship ever platinum bullion order for free.
