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How to Invest in Platinum & Palladium

In the past, we discussed the value of investing in Gold and Silver. These better-known metals are more accessible and easier to mine, making them a safe go-to investment since they hold their value and continue to be more widely utilized in the industrial process. In this article, we focus on Platinum and Palladium, two of the six elements (Platinum, Palladium, Rhodium, Ruthenium, Iridium, and Osmium) that comprise the Platinum Group Metals (PGMs). Platinum and Palladium are newer to the world of precious metals. As such, they are less understood for the value they bring to the table. Nevertheless, Platinum and Palladium hold their value and investment capacity. Not to mention, in recent years, prices have sky-rocketed due to challenges in the mining extraction process.

WHAT’S THE VALUE? 

Platinum and Palladium are part of a group of scarce metals as there are very few deposits in the world, South Africa being the highest deposit location for Platinum and Palladium. As a metal, Platinum and Palladium are stronger metals than gold and silver and have a much higher melting point, double to be exact. In colour, these metals are white, the same as Rhodium and Indium.

The value for these metals comes primarily from their medical and industrial usage, as they offer chemical properties of conductivity, a high melting point and form very well to create extremely thin wires used to create stitches and the like. For instance, Platinum is used in catalytic converters and medical supplies such as stints, meshes or wires. These two metals function well in places requiring high sterilization and don’t corrode or react with other metals. While Platinum is mainly utilized in medical applications, Palladium is primarily used in the automotive and dental fields. 

“PGM’s have only recently been looked at as an investment product,” explains Atef of Express Gold Refining, “this is primarily due to the fact that these metals were not widely available and were never used as a currency, like gold and silver. As well, their reputation was as an institutional type of product. In terms of value, Palladium used to be cheap, one-hundred to two-hundred dollars an ounce, but now it has reached two-thousand dollars per ounce while Platinum is falling in price.”

WHY INVEST IN PLATINUM AND PALLADIUM? 

As metals, Platinum and Palladium are scarcer than Gold and Silver, the cost of extracting them is increasing due to the very harsh environments where they are mined. As such, they are being mined less, making the small amount available very desirable to attain. In fact, these metals are getting so scarce that people depend on recycling these metals. As you can see, scarcity or supply and demand make Platinum and Palladium very valuable.

HOW MUCH SHOULD SOMEONE DEDICATE WITHIN THEIR PORTFOLIO TO THESE METALS? 

“Platinum and Palladium would be the last items I would add to my portfolio.” Cautions Atef. “In Canada, Palladium is still not considered an investment vehicle as it’s still seen as an industrial product. However, within the past 3-4 years, Platinum was granted a tax exemption. As an investor, I would approach these metals as a safe way to navigate inflation. As prices rise, your money will still be protected. For instance, if you need to buy a property and everything has gone up ten percent, these metals would have gone up about ten percent as well, so you will not be in a position where you are losing money.”

HOW TO INVEST?

The best way to invest in precious metals is through purchasing Bullion, just as investing in gold and silver. Bars remain cheaper, while coins have a higher premium due to the cost of forming, stamping and decorating them.

IS THERE A STANDARD OR MARK OF QUALITY?

When looking for quality, look for PAMP Swiss, The Royal Canadian Mint, as well as Australian Mints.

Although the PGM group of metals remain less understood than Gold and Silver, they are a valuable asset to add to your investment portfolio as they keep their value during times of inflation, are rare and difficult to extract (driving up their value), and they continue to be used in medical and industrial fields.

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