The Gold to Platinum Ratio
Platinum is an important Precious Metal because of its diversification to any investor's portfolio and its various industrial uses. A diversified portfolio that includes several different Precious Metals increases the safety of your holdings. Including Platinum breaks up the risks associated with single-metal investments.
The Gold to Platinum ratio indicates how much Platinum it takes to buy Gold. It indicates the relative strength of Gold prices compared with Platinum prices. When the ratio is low, it means that Platinum is overvalued relative to Gold. When the ratio is high, it means that Platinum is undervalued relative to Gold. Investors can use the ratio as a timing indicator when deciding when to buy Gold or Platinum.
The Rarity of Platinum
Platinum has become one of the most intriguing Precious Metals because it has historically traded at a higher price than Gold. That is an indication of two things, Platinum being rarer than Gold, and having more industrial uses. Other price factors include social and political factors, demand, market speculation and mining missions.
Platinum is more difficult to produce than Gold, and it only comes from very few parts of the world. The top Platinum producing nations are South Africa, Russia, Zimbabwe and North America. It is no surprise South Africa is the top Platinum producer, as the African country possesses over 80% of the world’s Platinum Group Metal reserves.
APMEX recommends discussing the pros and cons of investing with a financial advisor or professional.