Guide to Buying Precious Metals: Platinum

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Guide to Buying Precious Metals: Platinum

Investors in precious metals are attracted to platinum because it is scarce compared to gold and silver, with 60 percent of global production coming from just one country--South Africa. There is about 15 times more gold than platinum mined in the world every year, and silver production is about 100 times that of platinum.

There is also a growing demand for platinum in manufacturing and electronics. It is a key component in automobile catalytic converters. In fact, half of the platinum mined every year is consumed by the automobile sector. Platinum is also commonly used in electrodes, lab equipment, and jewelry. Engaged couples often choose the look and extreme durability of platinum for their wedding bands. The global demand for the precious metal, combined with its relative scarcity, make it an appealing investment for many.

 

Bars, Coins and Rounds

Investors interested in platinum will find that it is available in three forms: bars, coins and rounds. Tips for buying platinum are similar to tips for buying gold or silver. The retail price of platinum typically fluctuates in relation to the metal's spot price, or current cash price, in the commodities markets.

Bars

Investors who want to accumulate the most metal possible usually purchase platinum bars or ingots, because this type of platinum bullion is sold for the smallest premium over the actual value of the metal. Each bar is stamped with three critical pieces of information: weight, purity and the mint of origin. Mints generate a profit by charging a small premium over the actual value of the platinum in the bars they fabricate. Platinum bars are available in weights ranging from 1/10 oz to 1 oz.

Occasionally, limited edition platinum bars will be produced that command significant premiums over actual metal value. For example, in 2014, the Perth Mint produced 60 sequentially-numbered Argyle Pink Diamond 1-oz platinum bars. Each of these 99.95 percent pure ingots include seven Argyle pink diamonds, and they sell for 7-8 times the platinum spot price.

Coins

Coins are legal tender with a specified face value. The weight and purity are stamped somewhere on each coin, and the allure of platinum coins lies in their collectability. The precise condition of brilliant uncirculated and proof coins may be professionally certified by one of the reputable coin grading services. Certified coins in the highest grades will be bought and sold at significant premiums over the value of the metal that they contain. The investor who purchases a valuable coin is speculating more on its future numismatic value than in its intrinsic value as a precious metal.

Rounds

Rounds look very much like coins, although they are not considered legal tender. Both governments and private mints produce rounds. They come in standard weights, just like bars. Weight and purity are stamped onto each round. A round will typically be defined by its weight, rather than its denomination. That is, one will invest in a 1-oz round rather than a $1 coin. Some rounds may be identified by both weight and denomination, but they are still considered rounds. The $25, 1/4 oz Australian Koala platinum "coin" from 2000 is one example. Some investors prefer rounds over bars for aesthetic reasons; the designs found on the obverse and reverse are often very attractive.

Platinum is an extremely hard metal that wears out stamping dies much faster than gold or silver do. As a result, there are relatively few platinum coins and rounds produced around the world. However, the Perth Mint has produced them, and the United States has produced a well known series of American Platinum Eagles.

 

The Perth Mint

The heritage of the Perth Mint is well known. It began as a branch of Britain's Royal Mint in 1899, and it initially turned gold mined in western Australia into sovereigns and half-sovereigns. Australia's official bullion coin programme was launched in 1987.

Today, the historic Perth Mint produces a host of platinum bars and rounds in various weights, including 1/10 oz, 1/4 oz, 1/2 oz and 1 oz. Purity is very high, at 99.95 percent. The 2012 "Discover Australia" series from the Perth Mint features 1/10 oz rounds that feature prized species like the Red Kangaroo, the Whale Shark and the Kookaburra. The facility also produces legal tender Australian coins, including proof-grade specimens and commemoratives.

 

Conclusion

Once a prospective investor decides to purchase platinum, it is important to determine one's preference for either bullion or collectible platinum. Those strictly wanting to invest in platinum for its intrinsic value will want to look for bars or rounds that are sold as close to spot value as possible.

Platinum is regularly purchased through reputable online sources advertising on e-commerce sites like eBay. The fact that virtually every platinum bar, coin or round is stamped with its weight and purity is an important benefit for online buyers and sellers alike.

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