How to invest in platinum without physically owning it

Platinum is an under-discussed precious metal in the investing sphere. Alongside gold and silver, it presents an investment opportunity as a store of value, but is also a play on its industrial uses. However, compared to silver and gold, platinum is significantly more volatile. For these reasons, it is often a better short-term play.

Reasons to invest in platinum

1. Platinum has a low correlation to stocks and bonds, tending to perform well during periods of economic recovery. Even if there’s already gold in your portfolio, platinum can further diversify your risk than with gold alone.
2. Platinum has many industrial uses, and its price might not have future technologies already accounted for within it. Therefore, you can purchase platinum both as a store of value and for its growth potential.
3. Platinum’s supply comes mainly from South Africa and Russia, meaning it can become a play on the stability of these two countries. The more stable these countries, the lower the price due to a more robust supply.

One of the difficulties when it comes to investing in precious metals is having them delivered and stored for safe-keeping. However, there are a few ways around this, which we will look at now.

1. Purchase a platinum stablecoin

One of the simplest yet newest ways to invest in platinum easily without physically owning it is to purchase a platinum stablecoin such as Platinum Coin.

A platinum stablecoin is a type of cryptocurrency backed by a reserve of platinum to stabilize its price. In Platinum Coin’s case, it’s redeemable any time for real platinum from their vaults, at an exchange ratio of 1000 Platinum Coin per ounce of 99.9% pure platinum bar.

The speed and liquidity of trading a cryptocurrency instead of actual platinum are also greatly beneficial if you want to do short-term trading.

The risk with such a coin is the newness of crypto itself and the risk of having your crypto-wallet hacked or lost. Crypto is still too new of an asset for many investors to understand the risk vs. reward ratio well enough to commit to investing in it.

2. Invest in a platinum ETF

A platinum or precious metal ETF (Exchange-Traded Fund) will give you exposure to the metal without needing to store it yourself physically. For example, the Aberdeen Standard Physical Platinum Shares ETF (PPLT) has USD 1.6 billion of platinum assets under management, with its platinum held in secure vaults in London and Zurich.

The fund takes care of the storage costs through an annual fee built into the price of owning a share. These fees are taken out automatically and cover the cost of storage, security, and the like.

There isn’t too much danger associated with investing in an ETF in this way, except that you don’t have access to the physical metal yourself, nor can you directly exchange for it. Should something catastrophic happen, there is a chance you won’t be able to access the value of the platinum. However, this would only be in the absolute worst-case scenarios.

3. Invest in platinum miners

Instead of an ETF that will hold physical platinum for you in a vault, you can also invest in shares of platinum mining companies such as Anglo American Platinum, which is South African or Norilsk Nickel, which is Russian.

The benefit of investing directly in a platinum mining company is that you gain exposure to the general profits of the company, which tend to be higher than the returns of platinum alone. However, this potential for higher gains also means the potential for greater losses.

If the company is mismanaged or if mining production is slowed down for whatever reason, the company may lose money or even go bankrupt.

Therefore, investing in a mining company is not the best choice if you want to tie your investment as close as possible to the price of platinum alone.

Conclusion

We’ve looked over a few ways you can invest in platinum online, each with their own positives and negatives.

Invest in a platinum ETF if you want simple exposure to platinum without much hassle, or go for a platinum stablecoin for the more direct exchange value of the cryptocurrency for real platinum. If you want to get steady returns from owning a company, you can go for shares in a platinum mine. Keep in mind that you are betting on not just platinum but also the company itself in that case.