1. Investing in Gold? Try Platinum
For one of the world’s most precious metals, platinum sure doesn’t get a lot of respect. Unlike
gold, no one ever brags about prospecting for platinum, and the James Bond bad guy wasn’t
named Platinumfinger. And recently, another humiliation: Gold’s fear-fueled surge has pushed
its price-per-ounce near, and on some days, above, platinum’s, something that has happened only
twice in 15 years. Now some savvy investing pros are betting that platinum will, under the right
conditions, get some price payback.
At $251 billion, the platinum market is dwarfed by the $1.9 trillion market for gold. But unlike
gold, platinum has significant industrial uses, most notably as a key component of catalytic
converters in cars and trucks. Platinum is more rare than gold too, and its lack of easy-to-mine
supply has made it the pricier metal for some time. Since 1997, platinum has often cost 50 to 100
percent more than gold. In the long run, assuming the world’s economies keep growing,
“platinum is the safer play,” says Jon Nadler, senior analyst at bullion dealer Kitco Metals. “We
could see $2,000-an-ounce platinum before the end of the year.”
Of course, it’s hard these days for many investors to believe the global economy will get better
anytime soon. Indeed, worry over debt problems in Europe, along with the U.S.’s credit-rating
downgrade, is what propelled gold’s most recent surge to nominal record levels. (It’s still below
its all-time inflation-adjusted high.) Platinum’s price has been pretty stable, says James Steel, the
precious-metals analyst at HSBC. Gold’s price last surpassed platinum’s in 2008, when many
people felt the world was on the verge of financial collapse. But back then, gold stayed above
platinum for just one day. Prices for the yellow metal fell by the end of 2008, and platinum
rebounded throughout 2009. Nadler says an increase in auto production in Japan makes now the
time to jump on platinum.
As with gold, there are a variety of ways to invest in platinum, including futures contracts, the
stocks of mining companies (Stillwater Mining is one of the largest platinum miners in North
America) and an exchange-traded fund such as ETFS Physical Platinum Shares. Or take the half-
serious suggestion of Phillip Streible, a market strategist for MF Global: Instead of a gold
engagement ring, buy a platinum one.
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