Platinum bars as an alternative to gold and silver
Platinum bars are one of the exotics of the physical precious metal investment market. Because platinum reserves around the world are significantly lower than stocks of either gold or silver, the market is tight and price fluctuations can be quite significant. Nevertheless, for investors, platinum bars remain an interesting alternative to silver and gold.
Investor interest in platinum is growing
Shiny grey platinum is considered the finest of the precious metals and is heavier and more durable than its golden-yellow rival. However, while gold and silver have acquired centuries-old acceptance as currencies and investment instruments, platinum clearly has a much shorter tradition in this regard. In fact, this precious metal ’s increasing popularity with investors can actually only be traced back a few decades.
Platinum jewellery also has its attractions for many around the world. However, the greatest need for this rare metal is undoubtedly in the automotive industry, which primarily uses it in catalytic converters where it is used to facilitate the purification of exhaust gases. But platinum also plays an important role in the manufacture of fuel cells and other industrial products. Investors can purchase physical platinum either as bars or coins.
Platinum bars: investment units available
Platinum bars usually consist of 99.95% fine platinum and are produced for private and commercial investors at various mints for investment purposes.
They come in many sizes, which makes them suitable for almost every budget. Small platinum bars ranging in size from 1g to 100g are usually minted under high pressure, very much like platinum coins. Some manufacturers also offer minted bullion bars in a selection of larger sizes. However, most often, heavy platinum bullion bars in sizes from 250g to 1kg are created via a casting process. All bars are clearly marked with the manufacturer’s identifying logo and display their weight and degree of purity.
Platinum per-gram surcharges, which mostly reflect manufacturing costs, start to fall as the denomination of the platinum bar rises. During production, bars are randomly and continuously sampled and weighed for quality assurance purposes. Material samples are also gathered and tested to ensure the fineness of platinum in each ingot is perfectly maintained throughout the production process. This is designed to ensure that no accidental contamination is introduced during manufacturing. Finally, a visual inspection is carried out before the bars are shrink-wrapped in a foil or blister box for protection.
Who produces platinum bars?
There are a number of reputable mints that produce platinum bars. The best known include Pamp, Umicore, Argor-Heraeus, Metalor and Valcambi.
The product quality hardly differs across all these manufacturers, because all standard bank platinum bars usually have a fineness of 999.5/1000. However, there are collectors and investors who have a preference for individual manufacturers. Here, it is usually the methods of minting platinum bars which come into consideration, because these will differ from one manufacturer to another.
Platinum bars are usually available in the following denominations:
Where can collectors and investors purchase platinum bars?
Platinum bars can be bought and sold via banks, or precious metal dealers such as Echtgeld AG. Unlike the purchase of gold bars, VAT at 7.7% must be paid when purchasing platinum bars in Switzerland. This is one cost factor to keep in mind when investing in platinum bars.
However, there is a legal way to completely avoid paying a VAT levy on platinum purchases: If you store your platinum bars or coins in a duty-free warehouse in Switzerland, such as the facilities offered by Swiss Gold Safe, you can buy your precious metal tax-free. Platinum bars are also usually a little cheaper than platinum coins because the production process is less complex.
What about platinum price fluctuations?
The supply and demand context for platinum changes frequently, so the price remains relatively volatile. As a result, there can be considerable price fluctuation, even over relatively short timescales. In the course of the 2008 financial crisis, the platinum price per ounce collapsed from almost 2,200 to 600 US dollars within a year. Another feature which exacerbates platinum’s volatility is the fact that it remains a very rare precious metal which only occurs in significant quantities in a very few countries.
It is estimated that 70% of the platinum mined worldwide comes from South Africa, followed by Russia with 15%, and then Canada and Zimbabwe with 5% each. Smaller amounts are also sourced from the USA and Colombia. Globally, less than 200 tons of platinum are mined every year. By comparison, the amount of gold mined over the same period is around 3,000 tons.
About 40% of this annual production goes straight into catalytic converters for vehicles, around 25% is used in industrial sectors such as chemicals and medical technology, and 24% is made into jewellery. Only about four percent of all mined platinum is used to produce coins and bars for investment purposes. However, this rare metal classified as Pt in the periodic table of elements has once again started to increase in popularity since the beginning of the 2020 pandemic.
Where can platinum bars be stored?
Like gold ingots and silver ingots, platinum bars can be stored either at home or with banks and dealers in safe deposit boxes or in segregated storage facilities. We would recommend our own bank-independent storage in a safe deposit box in Switzerland and Liechtenstein, or our individual, segregated storage in a duty-free warehouse in Switzerland.