Gold Vs Platinum: Which Is A Better Investment?

Gold vs platinum: Price and liquidity

Over the long-term, gold and platinum tend to move in the same direction. But there are factors that affect each precious metal independently. The value of platinum depends on supply and demand while that of gold relies heavily on investor sentiments.

Gold’s status as a safe haven pushes its prices up during periods of economic uncertainty. And platinum prices fall because of declining demand. The reverse is observed during periods of sustained economic growth.

As of this writing, platinum is trading at $986.31 per ounce vs gold’s spot price of $1,568.40. In the present economic scenario, platinum is vulnerable to fluctuations in both supply and demand. Gold prices have gone up because of the US-China trade tensions and poor global economic growth.

The price differential between the two precious metals is an inter-commodity spread. Sometimes gold trades at a premium to platinum, and sometimes the white metal commands a premium. The gold-platinum ratio not only helps us understand the relationship between the two, but also offers clues as to the market sentiment. Platinum is cheaper than gold if the ratio is above 1, and vice-versa.

Both gold and platinum are highly liquid assets. You can easily trade them for cash. They both trade in over-the-counter and physical markets around the world.

Gold vs platinum: Which is more precious?

Investment opportunities arise when there are divergences in the gold-platinum ratio (price of gold divided by price of platinum). Historically, the ratio has been below 1, meaning the price of platinum has been higher than gold. But currently, the ratio is around 1.6, which means platinum is cheaper and more attractive.

Both gold and platinum are precious metals, but there are factors that independently affect each of them. And that’s where platinum becomes unreliable. Gold trades based on investor sentiment, not on supply and demand. It’s relatively less volatile than platinum.

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