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Is it still worth it to invest in Platinum?

Authored by ZanderVanDerMerwe
09.09.2021
Market Overview
0
4 min

Overview

Gold and silver have always been recognized as valuable metals, resulting in them being coveted for a very long time. Even in modern times, precious metals are still a valued investment in the portfolio of many retail investors in South Africa. However, other precious metals have also attracted the attention of investors of the year, of which Platinum is worth mentioning. Platinum is scarcer than the popular yellow metal and it has a wide range of different industrial uses and applications, which has always made the platinum market worthy of investment. With South Africa and Russia holding the most known reserves in the world, platinum has always been a chosen investment when the gold market lost its lustre. However, as with most investments in precious metals, supply and demand are highly driven by economic factors, and both Russia and South Africa have experienced their fair share of challenges. Despite this, Platinum ended 2020 at $928 per ounce, which shows a sharp and shift rebound despite the Covid-19 pandemic. As 2021 started and progressed,  Platinum appreciated further to settle at $1,200 at the start of June says Madelien van Der Merwe from Forexrecomend.com 

Is Platinum still worth the investment?
In 2021, Platinum benefited from a broader trend which has been seen across several other asset
classes. This can be attributed to global optimism for a return to some normalcy because of the
rollout of Covid-19 vaccines around the world. If the world can return to pre-pandemic life and work processes across all global industries, it would mean that there will be an increased demand for industrial metals, such as Platinum.
In addition to this, one-third of the overall supply of Platinum is used by the automotive industry and
is used to manufacture spark plugs and sensors. As more people have started travelling with their cars to and from work, the demand for vehicles has increased, and people have reason to replace their old cars with newer models.
With an increase in the economic outlook and a more stable job market, consumers are also more
willing to purchase luxury items such as cars. Platinum has also seen an increase in demand as the
world follows the trend associated with greener, cleaner, more sustainable alternatives to old cars
that cause air pollution. Platinum has an important part in the green hydrogen era, especially where fuel cell deployment and renewable energy is concerned. These factors have driven the price of platinum into an all-time
high of $1,300 in mid-February for the first time in six years, turning most investors' attention to the
industrial metal. The World Platinum Investment Council (WPIC) has reported that the overall demand for platinum
has risen by 26% in the first quarter of 2021, while industrial demand for the metal rose 44%.

Despite these figures, investors are unsure whether Platinum is still a good investment, especially
considering that the price has remained flat for the past three months.

The Outlook for Platinum
If Platinum can break above its 2021 highs, it would not be unreasonable that the price can go up to
$1,500, but the last time these prices were achieved was in July 2014.
If the price of platinum falls, and it starts to test the trendline, the risk-reward profile can move
towards the downside. Investors who want to invest in platinum must consider whether they want
to enter a long or short position.
Investors who want to buy platinum may want to consider placing their stop-loss orders at the
January low price of $1,050 to prevent significant losses if platinum prices fall rapidly.

Authored by ZanderVanDerMerwe
09.09.2021
Market Overview
0
4 min

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