What Is Platinum?
Let me tell you directly: platinum is a chemical element, a precious metal, and a commodity that manufacturers rely on mainly for jewelry, electronics, and automobiles. You'll find it on the periodic table with the symbol Pt and atomic number 78. If you're looking to trade it, platinum futures are commodities contracts available on the CME's COMEX futures exchange under the symbol PL, and also on the Tokyo Commodity Exchange. You can also invest in platinum by buying shares in an exchange-traded fund that focuses on this commodity.
Understanding Platinum
I want to give you the background here. Spanish naval general and scientist Antonio de Ulloa brought platinum to Europe in 1735. Because of its silvery or white appearance, he called it plantina, meaning little silver. Today, most platinum is mined in South Africa, which handles about 80% of global production, with Russia coming in second. Roughly half of the platinum mined ends up in jewelry, where people value it for its silver-like color that doesn't tarnish. Remember, platinum is stronger and more durable than gold.
Key Takeaways
- Platinum is a metal used in jewelry, automobiles, and electronics.
- Platinum is much stronger and rarer than gold.
- Traders can buy and sell platinum futures, while investors can participate with ETFs that specialize in the commodity.
- The price of platinum has been trending lower since the 2007-2008 financial crisis, as investors show greater interest in other metals like gold and South African mines have substantially increased production of platinum.
Platinum in Everyday Use
In the United States, you'll see platinum engagement rings as a popular choice over white gold ones, which are made of gold, alloys, and rhodium plating for that white look—but rhodium fades, so those rings need replacing, while platinum holds its shine longer. The auto industry uses platinum in catalytic converters to cut down on toxic gases from internal combustion engines. This has created a secondary market for scrap converters, where businesses buy them to extract and resell the metal. Platinum also goes into thermometers, lab equipment, electrodes, and dentistry tools.
Platinum's Market Position
Platinum ranks as one of the world's most valuable elements and one of the costliest precious metal commodities. For decades, it traded at a big premium over gold, but that hasn't been the case since 2008. A weak global economy reduced demand for platinum, while investor concerns about central bank actions and the economy drove gold prices up. Since the 2007-2008 financial crisis, platinum has underperformed compared to gold, silver, and palladium. Market watchers say the 2008 crash turned investors away from platinum, leaving demand mostly to the auto and jewelry sectors. Plus, South African mines have ramped up production since 2014, adding to global supplies.
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