Platinum is viewed by many investors as a significant precious metal, although less frequently discussed than gold and silver. Several investors utilize platinum to hedge against inflation or as a haven in turbulent economic times. Platinum is also a valuable industrial metal used in the production of automobiles, jewelry, and technological devices.
Investors can purchase platinum coins or bars, futures contracts, or stocks to obtain exposure to the metal. A choice is a platinum exchange-traded fund (ETF). Stocks and ETFs are often more liquid than actual commodities because they do not incur storage or insurance fees. Determine the best platinum stocks and ETFs.
What Is Platinum?
When constructing a stock or bond portfolio, diversification may be achieved by including platinum, which is 30 times rare than gold.
Platinum is utilized as both an industrial and precious metal, with the majority of its usage occurring in the automobile industry, followed by industrial applications, jewelry, and finally, investments. As a result of platinum’s rarity and widespread use, it has a limited supply and relatively steady to rising demand, which might create lucrative investment possibilities. However, platinum prices tend to be more volatile than gold or silver, which can be disadvantageous for commodity investors seeking to limit portfolio volatility.
How to Invest in Platinum
You can invest in platinum by purchasing natural bars and coins or financial instruments, such as exchange-traded funds backed by the physical commodity or derivatives linked to platinum’s changing price. You may indirectly purchase platinum by purchasing assets whose value fluctuates with the cost of platinum, such as shares of mining companies or an ETF that invests in these enterprises.
Is Platinum a Good Investment?
Because of its rarity in the Earth’s crust, platinum is a rare or valuable metal. Because platinum is one of the rarest metals and has excellent resistance to corrosion and high temperatures, it is essential to several sectors, including the automobile and jewelry industries.
Approximately 70 percent of the world’s platinum is produced in South Africa. Russia is one of the largest producers of platinum in the world, accounting for roughly 10 percent of worldwide output.
The Usage of Platinum
Platinum is primarily utilized in diesel catalytic converters, which account for around 40 percent of the world’s platinum consumption. Catalytic converters, also known as auto-catalysts, decrease diesel-powered vehicle emissions. In contrast, palladium, which is also a member of the platinum group, aids in reducing the emissions of gasoline-powered automobiles.
A close second is a jewelry, which accounts for around 30 percent of the world’s platinum consumption.
There is concern that platinum’s long-term prospects are not as favorable, despite the possibility of a prosperous year. This is the case because the auto industry is undertaking a significant transition from gasoline- and diesel-powered vehicles to electric vehicles, which do not require catalytic converters. This might eventually lead to a decline in the demand for platinum. However, this transition will take time.
This move might bode trouble for platinum, although the metal’s use in certain battery types and other technological devices could mitigate the decline. In addition, platinum is used in both hybrid and hydrogen-powered automobiles, and thus demand might be supported despite the substantial transition in the auto sector.
Platinum Prices Are Rising
Concerns over a tighter supply have pushed the price of platinum up by roughly 9 percent year-to-date. The cost of platinum fluctuates due to fluctuations in supply and demand. During the COVID selloff in March 2020, prices plummeted to a 15-year low of $740 per ounce. Since then, prices have increased, reaching a peak of over $1,200 per ounce in March 2021.
Since then, prices have lingered above $1,000 per ounce, with some believing that they would continue to rise with the implementation of further sanctions against Russia. These penalties might reduce the supply of platinum, causing prices to rise if demand remains constant.
Platinum Is Environmentally Friendly
Platinum offers various environmental advantages, even though mining any finite metal is troublesome.
First, it serves an essential function in catalytic converters, which aid in reducing automotive emissions.
Second, platinum is utilized in hydrogen fuel cell electric vehicles to assist in the separation of hydrogen into discrete components, therefore generating power. This new technology is viewed as an alternative to battery-powered electric vehicles.
It’s worth mentioning that Toyota, one of the major automakers globally, is currently making hydrogen-powered cars like the Mirai. However, it remains to be seen if hydrogen-powered electric vehicles will become ubiquitous. This indicates that hydrogen-powered cars may be here to stay, with platinum playing a crucial role.
Why Should You Research Platinum?
Platinum may serve as a portfolio diversifier due to its industrial and precious metal applications, but it is riskier than gold and silver. The price of platinum is more variable than that of these other precious metals. However, astute investors prepared to take on a bit more risk may discover opportunities in this rarer-than-gold commodity.
Platinum vs. Gold
The low concentration of platinum in the Earth’s crust makes it 30 times rarer than gold, and it is also extracted in far lesser amounts than gold or silver. However, platinum’s price is far more affected by supply and demand than gold’s, resulting in higher price volatility. For example, platinum beat gold by 65 percent between 2007 and mid-2008 but then plunged by more than 60 percent in the second half of 2008 to practically on par with gold’s price.
Platinum vs. Palladium
Platinum is frequently discovered with other metals, notably palladium, extracted from many of the same places. Many industrial applications, however, can also employ them interchangeably. Consequently, the platinum and palladium markets are interdependent in supply and demand. When the price of palladium increases, platinum may be replaced.
Pros of Investing in Platinum
Rarity. Platinum is thirty times more uncommon than gold.
Great demand. Platinum is utilized in various industrial and precious applications, with the automobile sector constituting the majority of its direction.
Cons of Platinum Investing
Volatility. Platinum’s price volatility is greater than that of gold or silver, reducing its ability to smooth portfolio returns.
Few investment alternatives. There are just a few investment products directly related to platinum, although the number of products with broad commodities exposure is far greater.
8 Best Platinum Stocks to Buy in 2022
1. Anglo American Platinum (ANGPY)
Anglo American Platinum, often known as Amplats, is the world’s largest integrated producer of platinum, meaning that its midstream activities surpass those of Sibanye. This Sub-Saharan Africa-based pure-play platinum corporation generated an astounding $215 billion in sales during the second half of its previous fiscal year. In addition, the company generated $108 billion in EBITDA, $49 billion in net cash, and a return on capital employed of 183%.
Amplats remain well-positioned to prosper in the short term, with rising platinum prices being the primary beneficiary. However, the stock’s potential to dominate the supply chain for the EV (Electric Vehicle) market, which adds a wealth of earnings growth potential to its business model, excites me the most.
I do not believe the market has fully valued Amplats’ meticulously crafted platinum portfolio, even though the stock has increased by more than 20 percent this year. Amplats is trading at a price-to-earnings ratio of 7.56x and a PEG (price-to-earnings growth) ratio of only 0.05x, indicating that its stock price has not increased at the same rate as its earnings leaving us with an undervalued asset.
In terms of dividends, Amplats is a solid investment. Its dividend yield of 5.74 percent is accompanied by a dividend coverage ratio of 2.5x, indicating a favorable risk-return profile for income-generating assets.
2. Impala Platinum Holdings (OTC: IMPUF)
Impala Platinum Holdings, often known as Implants, is a holding company with holdings in many mining businesses that produce platinum, palladium, and other platinum group metals (PGMs) and copper-cobalt, and nickel. The most valuable asset of the holding company is the Impala mine in South Africa’s North West area. Other holdings include the Mimosa and Zimplats mines in Zimbabwe and the Marula and Two Rivers mines in the Bushveld Igneous Complex of South Africa. Impala Canada was formed by acquiring the Canadian North American Palladium corporation and its Ontario mine.
3. Sibanye-Stillwater (SBSW)
Sibanye is a South African metals conglomerate and the world’s largest primary producer of platinum. Under the leadership of its CEO, Neal Froneman, the company has flourished, and its 2019 acquisition of Lonmin set it apart from most other platinum miners, allowing it to expand rapidly.
Sibanye had $11.64 billion in sales in 2021, an increase of 50.4% from the previous year. As the metals and minerals index remains elevated due to supply-chain difficulties, the company is anticipated to continue its growth trajectory.
In addition, Sibanye’s stock is undervalued after earning 77 cents per share in the fourth quarter. SBSW stock is selling at a 5-year discount to cash flow of 91.80%, indicating that the market has not priced in the asset’s fundamental value yet. In addition, with a dividend yield of 9.06 percent, Sibanye is a profitable dividend bet; I believe it will be able to maintain its dividend profile as the precious metals sector positions itself for a multi-year bull market.
4. Vale (NYSE: VALE)
Vale S.A. was begun in 1942 as the Brazilian state-owned Companhia Vale do Rio Dolce and eventually became one of the most outstanding mining enterprises in the world. Vale, headquartered in Rio de Janeiro, operates in roughly 30 countries and is the leading producer of iron ore, nickel, and pellets globally. Vale provides infrastructure development services, such as the construction of ports, trains, terminals, steel and energy production facilities, and mining activities. As the second-largest nickel producer in the world, Vale can extract platinum from its massive nickel mining activities. Currently, the firm produces roughly 134,000 ounces of platinum each year.
5. Group of Platinum Metals (AMEX: PLG)
In 2000, Platinum Group Metals Ltd. was created in Vancouver, Canada. The corporation discovers and develops assets containing platinum and palladium. Platinum Group Metals acquires South African mining sites, notably the Waterberg project on the Northern Limb of the Western Bushveld Complex and its Canadian mining interests. Platinum Group Metals also develops platinum and palladium-based battery technologies for the next generation. PLG stock qualifies for Benzinga’s top stocks under $5 and $10 at current pricing.
6. Franco-Nevada Corporation (FNV)
Franco-Nevada Corporation operates in Latin America, the United States, Canada, and globally as a gold-focused royalty and streaming firm. It works via two divisions: Mining and Energy. The business concentrates its portfolio management efforts on precious metals, such as gold, silver, platinum group metals, and energy, including oil, gas, and natural gas liquids.
The opening price for shares of Franco-Nevada Corporation was $143, up from the previous day’s finish of $142.57. The most recent cost was $142.06 (25-minute delay). The trailing-twelve-month revenue for NYSE-listed Franco-Nevada Corporation is around USD1.3 billion.
7. ASA Gold and Precious Metals (ASA)
ASA Gold and Precious Metals Limited is an investment manager with public ownership. The company invests in the global public stock markets. For the most part, it supports the stock of companies involved in the mining, exploration, or processing of precious metals such as gold and silver.
The shares of ASA Gold and Precious Metals started the day at $18.55 after closing the previous session at $18.78. The most recent cost was $18.29 (25-minute delay). ASA Gold and Precious Metals is an NYSE-listed company with trailing 12-month revenues of around $2.5 million.
8. Wheaton Precious Metals (WPM)
Streaming firm Wheaton Precious Metals Corp. primarily sells precious metals in Canada and abroad. The corporation offers deposits of gold, silver, palladium, and cobalt.
The Wheaton Precious Metals share price began the day at $42.45 after closing yesterday at $42.45. The most recent cost was $41.31 (25-minute delay). Wheaton Precious Metals is an NYSE-listed company with a trailing 12-month revenue of around $1.2 billion and 44 employees.
3 Best Platinum ETFs in 2022
1. abrdn Standard Physical Platinum Shares ETF (PPLT)
PPLT is designed as a grantor trust to track the spot price of platinum after expenditures are deducted. The ETF is traded on the NYSE Arca electronic market, and platinum pricing is based on the London Platinum and Palladium Market’s delivery requirements. Physical platinum housed in safe vaults in London and Zurich backs the fund. Investors should be aware that platinum prices are cyclical and strongly related to the global vehicle sector.
2. GraniteShares Platinum Trust (PLTM)
Like PPLT, PLTM is established as a grantor trust backed by platinum stored in a vault. The location of the burial in London is examined twice every year. Metal lending is prohibited, and the trust may not hold derivatives. The fund’s objective is to provide a cost-effective alternative to investing in platinum by following the spot market price of platinum minus the fund’s expenditures. Platinum is also utilized in biomedical research, specialty electronics, specialist manufacturing, and the automobile sector. PLTM is listed on the NYSE Arca and may be traded via a brokerage account.
3. iPath Series B Bloomberg Platinum Total Return ETN (PGM)
As noted above, PGM is the only platinum fund organized as an ETN. The fund’s objective is to replicate the Bloomberg Platinum Subindex Total Return. Instead of holding real platinum, the fund invests in futures contracts. Due to the low trading volume of PGM, total trading expenses are expected to be higher compared to assets with more liquidity. The major exchange for the ETN is the NYSE Arca.
How to Buy Platinum Stocks and ETFs
- Invest in several different platinum stocks in the list by registering with an online broker or platform.
- Compare trading platforms for stocks. Compare carefully to find the best brokers based on their fees and bonuses.
- Create and fund your trading account. You will need personal and financial information, such as your contact and banking data.
- Look for the stock that interests you. Find the stock by its name or symbol, such as FNV or ASA.
- Determine how many to purchase. One broker allows partial share purchases, while another requires complete share purchases.
- Choose a kind of order. Invest in the platinum stocks immediately with a market order, or use a limit order to postpone your investment until the stock hits your preferred price.
- Buy the shares. Tap or click the Buy button on the trading platform. Once you have invested in the precious metals business, monitor the performance of your investment to determine when to sell.
Although it is possible to earn from investing in platinum stocks, it is essential to remember that, like any other investment, platinum stocks are not risk-free. These stocks are subject to changeable conditions, both in the market and the precious metals business; thus, you should thoroughly evaluate your choices before investing. You should also compare brokers if you’re starting in the stock market or haven’t looked at your accounts in a while.