Purchasing Gold or Platinum as an investment may seem like a difficult decision. Both are safe havens and can be used as a hedge against inflation.
Platinum is cheaper than gold and harder to mine. What’s the difference between these two precious metals?
Let’s explore the pros and cons of both before you decide which is best for you. Investing in gold can increase your wealth, but buying platinum may not be the right choice for everyone.
Gold is a hedge against inflation
Some people believe that buying gold as a hedge against inflation is an excellent way to protect themselves from rising prices.
Yet, the evidence that gold can serve as an effective inflation hedge is hardly convincing. During the 1980s, gold prices fell by 70 percent in real terms, and by 81.6 percent when adjusted for inflation.
Meanwhile, the price of other commodities like oil and food went up. In this situation, it is important to remember that gold is a long-term investment product, and not a quick-fix solution.
Nevertheless, it has not been proven that gold is a hedge against inflation in the USA. In the United States, a study published in 2013 found that gold prices did not correlate with inflation.
However, this result was only observed after the volatile early 1980s period was removed.
In addition, co-movement between inflation and gold prices is time-varying, and it increased in the 2000s. Thus, if you are an investor in the USA, investing in gold may be a good option.
However, a number of studies have shown that gold prices have little relationship with CPI in the long-run.
In Japan, for example, gold prices are inverse relation to the CPI. In other countries, such as China and India, gold prices have negative coefficients, and are therefore not a good inflation hedge.
A number of studies based on short-run data suggest that gold is not a good inflation hedge.
Platinum is a safe haven
Precious metals are considered safe havens in times of economic policy uncertainty, notably trade wars and the Trump Presidency.
Other variables such as stock volatility, interest rates, and credit spreads also play a role in their safe haven characteristics.
The results of the study are mixed across different markets, however, and their model specifications are quite fragile.
In contrast, the study looks at the performance of four precious metals over 11 countries.
The low volatility of platinum has contributed to its poor performance compared to its cousin, gold.
Platinum’s lack of credibility as a safe haven investment is a contributing factor to its poor performance.
According to Adrian Ash’s article on Mineweb, the lack of store of value demand in platinum largely explains its poor performance relative to gold.
Its relatively short history as a prized precious metal has also caused it to lose value, and the risk of cartel-like action is higher than that of gold.
While gold certificates offer the benefits of physical ownership, they don’t offer any insurance against inflation and cannot be exchanged.
Because precious metals have an intrinsic value, their prices have a strong track record of inflation protection and aren’t susceptible to deflation. As such, they offer genuine upheaval insurance.
There are a variety of reasons why you should consider purchasing platinum. Here are some of them.
It is cheaper than gold
Gold and platinum are both great investment choices and both can provide valuable returns.
Gold and platinum have a long history of being stable as commodities and currencies.
As such, they are good choices for investors who want a diversified portfolio. Platinum is cheaper than gold but has comparable benefits. As a store of value, platinum is more stable than gold and is also cheaper to purchase.
While gold is more valuable than platinum, the price difference between the two metals makes it a better option for investors looking for a safe investment.
While gold tends to be more valuable and is more stable than platinum, both metals fluctuate in value.
Historically, gold has been valued higher than platinum, but in recent years, platinum has decreased in value. Most informed investors will look at price differences between gold and platinum to determine which is the better investment. The price difference is usually expressed as a ratio.
When it is greater than one, platinum is cheaper than gold, while a smaller ratio indicates it is more expensive.
Although gold is still the most popular investment choice, platinum is more affordable than its more valuable cousin.
Many investors have been flocking to gold funds in recent years, but platinum is actually cheaper than gold for investment purposes.
This is because it is used in autocatalysts for diesel engines. But, the price of platinum has fallen in the last year, which is a sign of a potential reversal.
It is harder to mine
Although gold and platinum are not the hardest metals to mine, they are both important for the development of advanced technologies.
Mining gold is comparatively easier than platinum. In addition to jewelry, gold is also used in various industries, including electronics and aerospace.
This is because of its conductivity, which ensures long-lasting durability. This makes it a more popular choice for investments.
Aside from being harder to mine, platinum is less expensive to produce, and thus, has more upsides for companies than gold.
Before, it was believed that platinum was formed deep underground under high pressure and high temperatures and deposited on the surface through weathering.
However, a new research by RMIT and the Monash University has revealed that platinum forms at a deeper level than previously believed.
The research was published in the journal Nature Geoscience. The findings were also published in two research papers by the German Federal Institute for Geosciences and Natural Resources.
While gold is a more common precious metal, platinum is harder to mine. It is much deeper in the earth and more difficult to locate.
Platinum is 30 times rarer than gold, making it more difficult to extract. In addition to the difficulty of mining, platinum is also more precious. Platinum is a more valuable metal and is a preferred material for jewelry.
In addition to being harder to mine, platinum is also a better investment for the average person.
Let’s get back to our topic.
It is more valuable in many industries
Platinum is a precious metal that is fifteen times rarer than gold, and has no known stockpiles. Its high density, resistance to corrosion, and malleability make it a valuable commodity for industrial uses.
It is used in jewelry, dentistry, and aeronautical components. Recently, gold has passed platinum in price per ounce, but it is predicted that platinum will surpass it in the future.
Both platinum and gold fluctuate in price. While platinum is often worth more, it is also more volatile. Platinum tends to decrease in value more quickly than gold, and is more prone to price spikes than gold.
This difference in price reflects the relative supply and demand of these metals. Platinum is a more popular investment choice due to its high demand and widespread application.
Moreover, it can help you hedge against inflation. Use an asset allocation calculator to calculate the correct amount of platinum funds to invest in.
Although both metals are valuable, gold has a longer history of value. Compared to platinum, gold is used more extensively in jewelry, electrical, and medical industries.
While gold tends to increase in value during economic downturns, platinum’s value decreases when car production is slow. This is because platinum is used in catalytic converters. If car production slows, the value of platinum goes down.
It is less volatile than gold
There are many benefits of investing in precious metals, including lower volatility and potential inflation protection.
Gold and silver have a long history of stability, and their prices fluctuate much less than most other investments. These metals tend to increase in value in the long term.
While they can lose value in the short term, they tend to increase in value over the long term. In addition, they are remarkably resilient to economic turmoil, and their value has increased during recent downturns.
While gold is more volatile than platinum, its price tends to remain more orderly. This makes it easier to determine trends and forecast market direction.
Because platinum is more orderly, it can offer a higher return on investment. However, gold is better for longer-term time frames.
While platinum is less volatile, gold runs tend to last much longer and don’t have wide pullbacks. Hence, gold is a better investment if you’re looking to invest in a long-term position.
As gold, platinum has been trading on the global commodities markets around the clock.
Platinum is more expensive than Gold, but still fetches a higher price per ounce. Its industrial use also tends to give it a more stable price.
Compared to gold, platinum’s value is not affected as much by fluctuations in global markets. And because of its scarcity, it’s less likely to fall.