Platinum - at least in terms of wedding anniversaries (70th) or the record sales required for the plating of a commemorative disc - sits above silver and gold at the top of the precious metals hierarchy. But what is platinum, and how can it be bought as an investment?
What is platinum?
Platinum is a highly valuable metal and one of the rarer elements in the earth's crust. Due to its scarcity and given its variety of uses, platinum holds high value and is a major precious metal commodity.
As one of the most corrosion-resistant, least reactive metals, platinum is used in a wide variety of industrial and manufacturing processes, from catalytic convertors to glass manufacture, with further uses in medicine, jewellery and as an investment asset.
Platinum demand is spread across four main segments: automotive, industrial, jewellery and investment. Over the past five years the proportion of the world's platinum used in these segments has been 40%, 24%, 30% and 6% respectively.
An unknown, new metal "which no fire or Spanish artifice has been able to liquefy" was first found by Europeans in Central America by Spanish explorers in the 16th century, according to contemporary accounts.
Two centuries later, platinum mines were discovered in Colombia and Peru. The chemical element, which occurred naturally in the alluvial deposits of rivers, was transported to Europe for study, and found to be "less pliable than gold but with similar resistance to corrosion."
In fact, pure platinum is denser than gold, more noble (meaning less reactive) and has a higher melting point (1,768°C).
White gold or little silver?
Subsequent archaeological discoveries have found platinum traces in gold used in Egyptian burials from as early as 1200 BCE. Platinum compounds have also been used in artefacts and jewellery in South America for at least two millennia.
In modern times, platinum is obtained commercially through mine extraction and as a by-product from nickel and copper mining and processing. The look and value of the precious metal led to it becoming known as "white gold", although the word platinum comes from the Spanish platina, or "little silver".
Chemical composition of platinum
Platinum has the chemical symbol Pt and its atomic number is 78. It is silverish white in colour and dense, malleable and highly unreactive.
A member of the platinum group of metals, it has six naturally occurring isotopes and has a natural resistance to corrosion, not oxidising in the air even at high temperatures.
Platinum is insoluble in nitric and hydrochloric acids but dissolves in a hot mixture of both, called aqua regia, to form aqueous chloroplatinic acid, which can be used in catalytic hydrogenation - vital in the food and petrochemical industries as well as in photography and plating.
Mining and refining platinum
Platinum is typically found in underground deposits, and mining it can be a complex process, usually carried out in deep pit mines. Once the metal has been extracted, it needs to be refined and processed before it can be used.
South Africa accounts for over 70% of the world's platinum supply, with Russia, Zimbabwe, Canada and the United States ranking as the other top five global miners of native platinum. Southern Africa is the world's only current primary source of platinum, with mines elsewhere producing platinum as a by-product of other metal extraction.
During electrorefining of copper, noble metals such as silver, gold and the platinum group metals settle to the bottom of the cell as "anode mud", which forms the starting point for the extraction of the precious metal.
Due to differences in magnetism, nickel and iron impurities can be removed from platinum through electromagnetism, while other impurities can be melted away under extreme heat, due to platinum's high melting point. Further impurities can be removed by treating in hydrochloric and sulfuric acids, which find platinum to be resistant but will attack other impurities.
Applications of platinum
The properties found in the chemical element - including its oxidation state and reaction to electric current - make platinum invaluable to a huge range of industrial processes and products, with platinum, platinum wire and platinum electrode technology finding uses from fertilizers to fiberglass, from anti-cancer drugs to spark plugs.
45% of platinum sold is estimated to be used in vehicle emissions controls. Placed in the exhaust system of a truck or car, a very fine coating of platinum speeds up the reaction of oxygen with deadly carbon monoxide and hydrocarbons (so-called 'greenhouse gases'), turning them into less harmful carbon dioxide and water, while also reducing the output of sulphur particles.
Holding and moulding molten glass requires tools that can both withstand temperatures of 1700°C and also avoid corroding or reacting with the silicates and other materials used.
The oil refining industry uses the metal as a catalyst for 'cracking' low-grade fuel into more efficient forms including gasoline, diesel and jet-engine fuel.
Medical & Biomedical
Stents, catheters, guidewires, neuromodulators, defibrillators and pacemakers use platinum components because the element is hard-wearing and doesn't react with the chemicals in human tissue.
Acting as a catalyst to boost the speed and efficiency of chemical reactions, platinum is essential in producing many key industrial, agricultural and household chemicals. Nitrogen fertilizers, nylon, polyurethane and a host of other everyday plastics have platinum involved in their manufacturing processes.
Platinum compounds are used in everything from sealants to electrical wire insulation, from lubricants to kitchen utensils.
Electrical and electronic use
One of platinum's applications at the dawn of the computer age was in the coating of hard disk drives. After a lull in demand for this technology, the surge in home-computer use and the boom in cloud computing, has seen platinum needed to help service work-from-home, video conferencing and online shopping in the post-pandemic age.
Platinum jewellery has become increasingly popular as an alternative to or companion with silver and gold. The prestige of platinum is also used in special edition watches by high-end producers such as Breitling and Patek Philippe.
How does the platinum market work?
As with gold and silver, platinum can be bought and sold for investment on the precious metals markets. Historically - as suggested by its placement over gold in the wedding anniversary hierarchy - an ounce of platinum has been more expensive than an ounce of gold.
One reason for this is scarcity (natural platinum is approximately 30 times rarer than gold), but also platinum has been seen as an investment for better economic times, where demand for the vast range of goods made by platinum-reliant processes are at their highest.
The platinum price peaked shortly before the 2008 financial crash, with a further market dynamic reacting to fears over power supply to platinum mines in South Africa.
Types of platinum investment
Platinum is traded on the New York Mercantile Exchange and the London Platinum and Palladium Market. To prove security, platinum ingots are assayed and hallmarked, as in the gold and silver markets. As of 2023, gold trades at twice the price per troy ounce of platinum.
Platinum can be bought and sold in the form of bars, coins and ingots. In addition, physically-backed Exchange Trade Funds (ETFs) are available, as are a range of derivatives and futures based on platinum's performance.
With platinum's applications being vital to many of the challenges of the 21st century, with a hard limit on supply and (to an extent) a counter-cyclical relationship to the price of gold, platinum is increasingly seen as an important portfolio diversifier as well as an investment in its own right.
Platinum and palladium
The palladium and platinum markets are interlinked in supply as well as demand. The two chemical elements are co-products in the majority of their mining locations, and they are substitutes for each other in several industrial applications, including automotive catalysts.
How to invest in platinum bullion
Platinum's range of bullion investments is more limited than gold or silver, due to the element's smaller annual mine output and its greater use by industry and technology.
Because platinum is an uncommon investment choice, demand for bars and coins can be uneven. That makes refineries and mints cautious about holding large stocks, and it can make retailers wary of buying back products they have sold.
Availability is further limited by uneven and sometimes unreliable supplies of newly mined metal. Uncertainty at the top of the supply chain - where labour and energy issues have been known to hit South African production - can increase the volatility of platinum prices and worsen the gap between prices to buy and prices to sell for people buying retail investment products.
VAT on platinum
Dealing spreads in the US typically run to 5% and more on platinum bars smaller than 1 kilogram (32 ounces), widening to 10% or more in Germany, the UK and Switzerland. There you must also pay VAT sales tax if you buy platinum outside the professional wholesale market and take possession for home storage. That adds another 7.6% of sunk cost in Switzerland – money you cannot reclaim when you sell – rising to a 19% surcharge in Germany and 20% in the UK.
To date this has made investment platinum difficult for private individuals to trade efficiently or without incurring VAT in Europe.
Low cost platinum investment and storage
BullionVault is an associate member of the London Platinum & Palladium Market (LPPM). This means that we can deal physical platinum without incurring VAT, as long as the metal stays securely vaulted on your behalf. You still own your metal outright, but the VAT only becomes payable if you choose to withdraw your platinum out of the vault.
In addition, we have access to the wholesale market at the top of the bullion chain, saving up to 10% in handling, shipping and retailing costs over coins or small investment bars.
You can learn more in our dedicated article about investing in platinum.