You can invest in platinum by purchasing platinum coins or platinum bars, but it is also possible to gain exposure to the platinum price without actually holding physical platinum. The most common method is to invest in platinum futures, which are a type of commodity futures. COMEX is one of the primary markets for platinum futures, where they are traded under the symbol PL. The Tokyo Commodity Exchange is another important market for platinum futures.
Among retail investors seeking exposure to platinum, a popular choice is to buy shares in an Exchange Traded Fund (ETF) that specializes in platinum investing. That way, you don´t have to get involved in the actual day-to-day futures trading; you simply invest in the fund and hope for the fund share price to go up. Make sure you know how the fund works: Is it backed by actual physical platinum ownership? Does it engage in futures contracts trading? Does it own stocks in companies in the platinum industry?
If you are okay with indirect exposure to the platinum price, you can consider investing in platinum mining stock companies.
A downside with owning physical platinum is that it tends to be more difficult to sell than securities with a high liquidity. You also need to consider possible costs associated with transporting, storing, protecting, and insuring your physical platinum.
A few points worth keeping in mind
- Platinum is one of the most high-priced metals in the world.
- Prior to 2008, platinum was more expensive than gold, but the financial crisis of 2007-2008 pushed the gold price up above platinum.
- South African mines have increased production of platinum substantially since 2014, making the global supply significantly larger than before.
- Today, mines in South Africa accounts for roughly 80% of the global platinum production. The second-largest producer is Russia.
- Many investors used exposure to platinum as a way of hedging against inflation.
- Platinum is a commodity with several uses. It is an important metal for the manufacturers of electronics and automobiles, and plantium is also used for jewellery, thermometers, dentistry equipment, and certain lab equipment.
- The global automobile industry tend to have a big impact on the spot price for platinum. Among other things, platinum is used in catalytic converters.
- Some investors consider platinum as a safe haven during troubling economic times. Bear in mind, however, that a downturn in the automobile industry is likely to result in a lower spot price for platinum.
Examples of Platnium ETF:s
The two main types of platinum ETF:s are the grantor trust ETF and the exchange-traded note ETF. When an ETF is structured as a grantor trust, it holds physical platinum ( platinum bullions) and carry out purchasing, selling and storing of the bullions. Exchange-traded note (ETN) ETF products are unsecured debt securities that track an underlying index. A Platinum ETF structured as an ETN will invest in futures contracts with the goal of tracking the spot price of platinum.
ABRDN PHYSICAL PLATINUM SHARES ETF
Trading as: PPLT on the NYSE Arca electronic exchange
Inception date: January 8, 2010
Issuer: Abrdn PLC
Structure: Grantor trust
PPLT prices platinum off of the London Plantinum and Palladium Market´s specifications for good delivery.
The fund is backed by physical platinum kept in London and Zurich.
GRANITESHARES PLATINUM SHARES ETF
Trading as: PLTM at the NYSE Arca
Inception date: January 22, 2018
Structure: Grantor trust
The fund is backed by physical platinum which is kept in London an inspected twice a year.
This trust is not allowed to hold derivatives, nor lend the platinum.
iPath Series B Bloomberg Platinum Subindex Total Return ETN (PGM)
This fund is structured as an ETN (Exchange-Traded Notes) and is designed to provide exposure to the Bloomberg Platinum Subindex Total Return. It is not backed by physical platinum; it invests in futures contracts.
Trading as: PGM (and the primary exchange for it is NYSE Arca)
Inception Date: Jan. 17, 2018
Issuer: Barclays Capital