Wednesday, January 2, 2008

Should I Invest In Platinum?

Investing in platinum is something many people are beginning to consider. Platinum continues to set record highs and it seems unclear when, or if, the price will come down. Typically, when everyone is jumping on board with a particular investment, that is the time to jump ship and move on. However, platinum has some traits that might just support these new highs.

First off, platinum is scarce, so supply is severely limited. Secondly, it is used extensively in commercial products--most notably catalytic converters. For those who are not car savvy, catalytic converters help to limit the amount of pollution cars produce. Since the world is only heading towards tighter environmental regulation, it is unlikely that catalytic converters are going away any time soon. Lastly, platinum is used in jewelry, where it is quite the status symbol.

On the other side of the debate, one could strongly argue that the price of platinum is being artificially inflated because of the current hostile climate in the main mining areas. In addition, the argument could also be made that, as the price of platinum continues to increase, manufactures will look to platinum alternatives for catalytic converters. Palladium can also be used in converters, but it does not work quite as well as platinum. The price differential between the two metals could possibly lead to a switch in the future, though. Once a manufacturer has made the switch, it may not be easy to switch back later if the price of platinum becomes more reasonable, which could possibly lead to a major drop in platinum's price.

Platinum, as with most precious metals right now, is experiencing a bull market. There certainly is a case to be made for a continued bull market in platinum. On the other hand, it can also be argued that the metal is overvalued. Only time will tell, but if you are interested in learning more, read our article about Platinum Investment.

1 comment:

Anonymous said...

Hi I am starting over at the age of 54 from 0 bucks.
Medical, business failure of spouse, desertion by spouse left me where I am. However, I have an excellent education, have been employed professionally, and found a great job. What if I invest
$5,000.00 in platinum in 09. Would I be able to sell at a slight profit in 2011?