Platinum may not be the first thing that comes to your mind when you think about investing in precious metals. While it isn't as well known as gold and silver, this metal is highly valuable because of its scarcity and wide-ranging industrial applications. If you want to invest in platinum with minimal cost and hassle, you should consider buying platinum bars. Learn more about platinum bars to see if they're a suitable option for you.
What Is a Platinum Bar?
A platinum bar is a bullion bar that contains 99.95% fine investment-grade platinum. It usually comes in sizes ranging from 1 ounce to 10 ounces, but it's also possible to find a 50-ounce or 100-ounce platinum bar. It's produced in a refinery and bears a mark or stamp that shows its purity, weight and the identity of its producer. When you buy a platinum bar, the price you pay is mostly dependent on the spot price, or current market price, of platinum.
Platinum is a silver-white precious metal from the platinum group of metals, which also includes palladium and rhodium. Due to its many useful properties, this metal has applications in a wide array of industries, including jewelry, electronics and automotive manufacturing. Platinum is mostly produced in South Africa, Russia and Zimbabwe [1].
Why Would I Buy a Platinum Bar?
While they aren't as sought after as gold and silver bars, platinum bars have become an increasingly appealing option among precious metal investors. The following is a list of good reasons to buy platinum bars:
- Protect yourself from inflation: If you invest in stocks, you may think that you're doing well if you get a 5% return. However, if the inflation rate is 6%, you still have a loss of 1%. Platinum bars are different in that they can retain their value when currencies become less valuable, making them a good hedge against inflation.
- Spread your investment risk: When it comes to investing, it's risky to invest in only one asset category since you're more likely to take a big hit if the asset performs badly. Buying platinum bars allows you to spread out your investments, diversify your portfolio and reduce your risk.
- Increase your physical assets: When you invest in bars of precious metals ” including platinum ” you have an asset that's real and tangible. In today's digital world, it's important to increase your physical assets so that you'll still have substantial wealth if your online investments go south or the stock market crashes.
- Enjoy a lower premium: A platinum bar tends to be less costly to produce than a platinum coin, so it usually comes with a lower premium. And the larger the bar, the lower its premium.
What Properties and Characteristics Should I Care About With Platinum Bars?
When you're looking for a platinum bar for sale, look for certain characteristics that can help you determine its authenticity. First, you should check the hallmark of the refinery, which is stamped on the top surface of the bar. The hallmark may vary from one refinery to another, but it typically includes the logo or name of the refinery, the weight, metal description, fineness and the serial number.
Additionally, a high-quality platinum bar comes with an assay certificate that contains all of the information that verifies its authenticity. The certificate also makes it easier for you to sell the bar in the future.
What Special Terms Do I Need To Know About Platinum Bars?
Platinum bullion dealers and investors use certain industry-specific terms when they're communicating with one another. Learn these common terms to ensure that you're informed and able to make wise investment decisions. Below are some of the commonly used terms related to platinum bars:
- Alloy: This is a mixture of two or more metals.
- Ask: This refers to the price at which a bullion dealer is willing to sell a platinum bar.
- Assay: This is the test that determines the purity of a platinum bar.
- Backwardation: This special situation occurs when the spot or cash price of platinum exceeds the forward price.
- Deferred settlement: This occurs when both parties of a bullion deal decide to delay the fulfillment of the agreement on a day-to-day basis.
- Fineness: This refers to the portion of platinum in a bullion bar expressed as parts per 1,000.
- Long position: This is when an investor buys an asset and holds it for a long time.
- Mark to market: It's the act of determining the current value of bullion assets against the latest market values.
- Refining: This is the process of separating and purifying platinum from other metals.
- Troy ounce: This traditional unit is used to express the weight of precious metals. One troy ounce is equal to approximately 31.1035 grams.
Why Buy Platinum?
Platinum is often synonymous with the term high value, which automatically translates to great quality and reliability. This precious metal is a solid investment for many reasons, including:
- Consistent demand in growth: Platinum has been extensively used to produce autocatalysts for diesel vehicles. Since the automotive industry is expected to grow significantly over the next few years, demand for this precious metal is bound to increase. [2] Platinum also has applications in other industries, including health care, electronics, jewelry and glass-making.
- Very limited supply: There are currently only about 200 million ounces of above-ground platinum, while above-ground gold amounts to more than 5 billion ounces. [3] Platinum's limited supply is likely to increase its price as demand continues to grow, so buying in the earlier stages of its growth can help you better increase the value of your assets.
- Rise in platinum investment: Many investment funds and private companies with pension funds are investing in platinum exchange-traded funds (ETFs). Experts believe that the steady growth of platinum ETFs will lead to a considerable increase in global demand for the precious metal.
So, are you wondering where to buy platinum bars? There are numerous dealers offering a wide array of platinum bullion bars, but make sure you buy from a reputable source. You can find out the reputation and credibility of dealers by visiting their websites and reading reviews.
Article Sources
1. NS Energy. 'Profiling the top five platinum producing countries in the world,' https://www.nsenergybusiness.com/features/top-platinum-group-metal-producers. Accessed October 1, 2020.
2. CISION PR Newswire. 'The global automotive motors market size is projected to grow from USD 20,321 million in 2020 to USD 25,719 million by 2025, at a CAGR of 4.8%,' https://www.prnewswire.com/news-releases/the-global-automotive-motors-market-size-is-projected-to-grow-from-usd-20-321-million-in-2020-to-usd-25-719-million-by-2025–at-a-cagr-of-4-8-301113089.html.. Accessed October 1, 2020.
3. Commodity. 'How The Platinum Trade Works – The Beginner Trader's Guide For 2020,' https://commodity.com/precious-metals/platinum. Accessed October 1, 2020.
