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Platinum and Palladium: Alternative Precious Metals
By Victor Rosario MONEY RESEARCH COLLECTIVE
Like gold and silver, platinum and palladium serve as investments that can help you hedge against inflation. However, platinum and palladium are not as well known as gold and silver for the investment opportunities they provide.
You can buy these alternative precious metals in physical quantities, as part of stock from a precious metal company or even traded in exchange-traded funds (ETFs). Read on to learn more about the pros and cons of investing in platinum and palladium.
Things you should know about platinum and palladium
Palladium was discovered in 1802 by chemist William Hyde Wollaston, while platinum has been known since ancient times and first formally studied by Antonio de Ulloa in 1735. Both metals are among the least reactive in the periodic table and have a variety of uses in different fields, including aesthetic and scientific applications.
Both are rarer than gold
Unlike what you might assume, both platinum and palladium are significantly rarer than gold. Both elements belong to the same group of periodic metals known as platinum group metals (PGMs), which also includes ruthenium, rhodium, osmium and iridium. All metals in this group are rare, with platinum, the most common among them, being only about one millionth of 1% of the Earth’s crust.
Both have uses in jewelry, dentistry and machinery
Both platinum and palladium are used for fillings and crowns in dentistry. The precious metals are also used in jewelry, with gold-platinum alloys, commonly known as white gold, becoming an increasingly popular fixture in modern jewelry. Palladium is also essential in catalytic converters, as the metal serves as a catalyst in the chemical process of hydrogenation in unsaturated hydrocarbons.
Both precious metals’ spot price are (usually) cheaper than gold
Platinum and palladium tend to trade at a cheaper price than gold. Although palladium saw a price surge during the pandemic, its spot price has since stabilized to pre-pandemic numbers. This can make both platinum and palladium an appealing option for those looking to make a smaller investment or simply diversify their precious metal portfolio.
How to invest in platinum and palladium
Most gold dealers also deal in other precious metals, such as silver, platinum and palladium. In fact, the word gold in “gold dealer” and “gold IRA” is sometimes used to refer to all precious metals. That being said, the world of precious metal investments can be complicated, and it’s best to know what to expect going in before making any rash decisions about your financial future.
Decide what type of investment you wish to make
As stated above, when investing in alternative precious metals, you can do more than just buy physical amounts of said metal. Exchange-traded funds, or ETFs, allow you to trade in securities backed by the price of the metal in question without owning it physically. You can also buy stocks in companies that mine or process platinum or palladium— another indirect way to invest in the metals without owning them.
Make sure you know the potential risks involved
When dealing with smaller markets, you might not always find buyers or sellers for your potential investments. This means the market might move at a slower pace than investors in gold and silver markets might be used to. Developing a risk management strategy with a qualified financial advisor before executing an investment strategy can save you some money in the long run.
Choose a reputable precious metals dealer
When buying physical assets of platinum and/or palladium, shop around for a reputable precious metals dealer that offers relatively low fees. You can also decide to use an online trading platform to invest in precious metals ETFs or stocks. These websites usually have educational material that you can use to learn more about the benefits of diversifying portfolios with platinum or palladium before making a decision.
Platinum and palladium: alternative precious metals summed up
Platinum and palladium are precious metal commodities traded in ETFs, stocks or bought in physical quantities as a method to diversify portfolios and invest in alternative metals to gold and silver. These metals’ historical spot price has little correlation with the dollar, making them a great hedge against inflation. Platinum and palladium’s multiple uses in industry and science along with its natural scarcity make them both good investments in a balanced portfolio.