Guide to platinum

Platinum investment

Platinum investing can take several forms, from small bars and coins to ETF trust funds and derivatives. Each way brings different costs and risks to consider, but platinum's range of bullion investments is more limited than gold or silver, because of both the precious metal's much smaller annual mine output and its much greater use by industry and technology.

This page explains how to invest in physical platinum at the very best prices and store it securely – ready to sell the moment you choose – at the lowest fees.

The case for platinum investing

Compared with gold or silver, few people ever think about investing in platinum, and fewer still take action. Yet platinum offers a unique investment with a solid case to consider:

  • Platinum is vital and irreplaceable in many high-volume industrial applications;
  • Platinum is recognised as the world’s premier jewellery metal and commands the highest of all precious-metal premiums as jewellery;
  • Ongoing demand faces tight supply, depleted above-ground stocks and rising underlying mining costs;
  • Likely demand growth comes from a wide range of technologies, plus continued marketing of platinum jewellery.

Although rarer than gold (barely one ounce of platinum has ever been mined for every 25 ounces of gold), platinum is everywhere in modern life, from catalytic converters in half of all European automobiles to hard disk drives in computer servers, carbon monoxide detectors in your home, thermocouples to check temperatures in industrial furnaces, and hard-wearing diamond clasps on most gold engagement rings.

In total, annual platinum demand has averaged almost $10 billion over the last 5 years – around one-third the value of silver sold to end-users. Platinum's investing demand, in contrast, equals just 10% of silver investment demand. The metal remains new and little-known as a financial asset with limited investment product availability to meet latent and pent-up demand.

Platinum coins for investment

Only Russia has ever used platinum as money, and only Russia has ever acquired stockpiles of platinum bars for its national reserves. The metal offers far fewer bullion coins to choose from than gold or silver today. The range of platinum bars available to 'retail' investors is also much smaller.

The US Mint has issued platinum American Eagles alongside its gold and silver coins since 1997, but only intermittently. The following year saw the Royal Canadian Mint, the Chinese central bank and Australia's Perth Mint all begin issuing platinum coins, but the RCM stopped in 2002 (restarting in 2009) while the Chinese Panda hasn't been made in platinum since 2005. The Perth Mint stopped minting platinum Koala coins in 2010.

Why the breaks in production? Platinum coins rarely meet a lack of collector demand, and after the Austrian Mint issued a new 1-ounce Philharmonic coin in 2016, new platinum coins are coming in 2017 from the Rand Refinery to mark the 50th anniversary of South Africa's first gold Krugerrand, and also from the Royal Mint in Wales. But because most platinum is consumed each year in industrial applications or jewellery, manufacturers can hit problems trying to find new metal. Demand from private investors for coins and small bars is also hard to rely on.

Problems with physical platinum investing

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. Investors choosing small platinum bars typically hope to save money against more expensive coins, but they also tend to want brand-new items, still in their packaging. So on re-sale, these secondhand bars most often end up re-melted as 'scrap' and put back into the wholesale supply chain as part of a larger wholesale bar. That process costs money, cutting the price paid to the dealer and so cutting the price which the dealer can quote to you to repurchase a platinum bar.

All this has made platinum difficult to buy and to sell as an investment. Availability is further limited by uneven and sometimes unreliable supplies of newly mined metal. Some 70% of annual output comes from South Africa, where energy and labour issues have hit production several times in the last decade. This uncertainty at the top of the supply chain can increase the volatility of platinum prices and worsen the gap between prices to buy and prices to sell for anyone at the other end buying retail investment products.

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. But there is another way.

Low-cost platinum investing

It's a common misconception that vaulted bullion, held in large bars and ready to trade in the wholesale market, is only suitable for the very wealthy. Yes, each platinum bar accepted by specialist vaults within the professional circuit must weigh between 1-6 kilograms (32-193 ounces). You also need more than one bar, because these facilities cater to wholesale traders and large investment accounts holding several million dollars of metal, not private individuals with smaller holdings.

But you can now access the same wholesale market – enjoying the same guarantee of quality with the same low storage fees and the same tight trading spread – from as little as 1 gram at a time by using BullionVault.

Already the world's largest online marketplace for physical gold and silver, BullionVault makes investing in platinum bullion cheaper, safer and easier than anywhere else.

Pricing: Nobody gets you more platinum for your money, nor a better price when you sell, because we plug you into the wholesale market. Here miners, refiners, bullion banks, industrial users and manufacturers trade the large Good Delivery bars from which all other platinum products are made. Going straight to the top of the bullion supply chain means you avoid the fabrication, handling, shipping and retailing costs of coins or small investment bars. This typically saves about 10% of your money.

No VAT: Anyone investing in platinum in Europe saves money again, because on BullionVault your purchases do not incur Value Added Tax (VAT). This is charged at 15-27% across the European Union. But the tax authorities recognize BullionVault as part of the professional market, because we are associate members of trade body the London Platinum & Palladium Market (LPPM). This enables us to deal physical platinum with you free of VAT, provided the metal stays inside the secure vaulting arranged 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.

Buy or sell 24/7: BullionVault is the only place in the world where you can trade investment bullion any time, any day. Buy or sell directly for US Dollars, Euros or British Pounds with no forex fees. You deal in open competition with other users, quoting your own prices if you wish to reduce the trading spread still further between live buy and sell prices. You can also trade at the global benchmark price set daily in London.

Daily audit: BullionVault is the only bullion business that proves your platinum is where it should be, in full, every working day. This daily audit explicitly reconciles your platinum to formal third-party Bar Lists from the specialist vault caring for it, alongside any gold or silver you may invest in. Independent assayers then visit the vaults and confirm the full allocation and quality of each bar once a year, coinciding with our business's annual financial audit by independent accountants.

Choosing to store your platinum investment inside secure vaults carries a cost of course. But it's much cheaper than trying to keep and insure your metal at home, and it is very much safer. It also means that, using BullionVault, you can then sell your platinum for full value the moment you choose.

To learn more and get started today, simply register your email address to open an account now.

 

Please Note: This analysis is published to inform your thinking, not lead it. Previous price trends are no guarantee of future performance. Before investing in any asset, you should seek financial advice if unsure about its suitability to your personal circumstances.

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