Platinum: An Attractive Alternative to Gold and Silver

While it is clear that bank measures around the world have been devaluing national currencies, it has also identified a long-term uptrend in precious metals.

Silver has been out-performing gold for the last little while and the trend could continue for the next few years. While gold and silver are certainly the most discussed precious metals, let?s not overlook platinum. A rarer metal than gold and silver, platinum has several industrial applications apart from being an investment metal.

Platinum has been in shorter supply recently due to the South African mining strikes. The high demand for the metal coupled with the supply constraint will drive the price up, making platinum a must buy for near term growth. Timing the investment is critical and currently it is a good time to be diversifying into platinum.

Platinum tends to trade higher than gold, generally around 1.5 ? 2 times higher than gold. Currently while platinum is trading slightly higher than gold, the usage of the metal signifies an opportunity to ascend towards $2000 per ounce. All precious metals stand to gain ground, but adding platinum to your portfolio is definitely recommended.

As you review your portfolio and look for ways to invest in the precious metal arena, understand there are a variety of ways you can invest. Like gold and silver, platinum allows investing in physical bullion and coins, ETFs that can track the price of platinum, as well as individual mining stocks.

Investing in Physical Platinum: Bullion & Coins:

1. Like gold and silver, one can purchase physical platinum bullion and coins. While the metal is rare, few reputable and established dealers do carry platinum bullion and coins. As is true with buying physical gold and silver, particularly coins, ensure that you invest in purest forms of platinum coins.

2. It would be wise to hunt down a local dealer to avoid paying shipping and handling charges. These ancillary charges do cut into the returns.

3. Investing through your IRA is another viable option. There is no physical delivery necessary although it is a good idea to take physical possession of the metal to ensure safety of the investment.

Investing in Platinum ETFs:

1. For Gold, SPDR Gold Trust?or Sprott Physical Gold?is quite popular amongst precious metals ETF investors.

2. For Silver, iShares Silver Trust? or Sprott Physical Silver? offers good exposure to silver.

3. Platinum investors can look at ETFS Physical Platinum Shares as well as Sprott Physical Platinum and Palladium Trust. Sprott is a CEF. Unlike an ETF, a CEF can trade at discounts to net asset values because the number of outstanding shares is always constant. An ETF, however, can create new shares immediately keeping the price very close to the net asset value.

Investing in Platinum Miners:

One way to get precious metals exposure is to invest in precious metals miners. Of course this is an indirect method and carries more risk than simply investing in physical precious metals. Normally platinum miners are classified as platinum group miners which include mining platinum, palladium, and rhodium. A couple of platinum group miners have recently gained popularity:

1. Stillwater Mining?mines at its Stillwater mine in Montana, US. They also have some exposure to Canadian and Argentinean mining properties. The miner has proven ore reserves in excess of 42.5 million tons in the Montana region and nearly 91 million tons in Canada.

Stillwater stock tumbled slightly after releasing mixed 2012 Q3 earnings reports and issuing a $300 million debt facility. They had missed earnings expectations. However, the stock rebounded strongly after renewed demand expectations for the platinum group metals.

2. North American Palladium? focuses on exploration, mining, and production of precious metals. While PAL focuses on mining platinum group metals, they also to some degree mine gold and silver. Its primary property, Lac Des Iles mine, is in Canada by Thunder Bay, Ontario. For 2012, Lac Des Iles produced nearly 160,000 ounces of palladium, exceeding management expectations. While PAL is not a platinum-only miner, it does mine platinum as well as other platinum group metals.

PAL operates under moderate debt levels and has the ability to fund exploratory activities. PAL is still a growing and an expanding miner. The stock is great for investors with some risk appetite.
Precious metal prices are set for increases over the long term. With growing demand, continued global tensions, and inflation concerns investors may want to consider diversifying into platinum and other platinum group metals. Platinum investors should definitely keep a close eye at global demand expectations of platinum group metals.

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