Platinum Uses

19 January 2018

Platinum is one of the most popular and pricey precious metals in the world. We’ve gathered some information to help you learn more about this metal, including:

What platinum is and what it can be used for
Where platinum can be found around the world
What influences the price of platinum
The mining and refining processes often used for platinum
Why to invest in platinum
How to invest in platinum

What is platinum and what is it used for?

Platinum is a dense, yet malleable and soft, metal that can resist corrosion and tarnishing. On top of that, it does not oxidise, so it could be used in a variety of ways. This desirable and highly valued silver-white metal is one of a few transition metals that include titanium, copper, silver, and gold.

Today, platinum can be used in the creation of jewellery (roughly 30% of the platinum that is mined is used in the jewellery industry). Beyond that, it can also be found in everything from electrical contacts, magnets, and pacemakers, to catalytic converters and drugs that fight cancer, as a few examples.1 Plus, researchers are still finding new uses for this popular metal.

Here are the top industrial uses for platinum:

Autocatalyst
Chemical
Electrical
Glass
Investment
Jewellery
Medical & Biomedical
Petroleum

Due to platinum’s exclusivity, many of the world’s most famous diamonds are found in platinum settings. These include the Hope Diamond and some of the beautiful pieces in Elizabeth Taylor’s jewellery collection.¹

Where is platinum found around the world?

Platinum is mined in Australia, the United States, Canada, South Africa, Zimbabwe, South America, and Russia. The majority of platinum, however, is mined in South Africa, which is the biggest producer of this precious metal. In 2016, South Africa exported more than 4 million ounces of platinum.²

What influences the price of platinum?

Before investing in any metal, including platinum, it is a good idea to be aware of what typically influences its price.

Demand from industries: Because of its many uses in products that are produced around the world, the demand from industry alone could be a driving factor in the cost of platinum at any point in time. For example, much of the supply of platinum is used in the auto industry, so when there are higher rates of production in that industry, there is greater demand for platinum, and that could cause the price of the metal to rise. And because platinum is also used in jewellery, including rings designed for engagements and weddings, the demand from that sector could also affect its price, especially as supply struggles to keep up with that demand. Historically, when the price of platinum makes it very expensive for industrial uses, industries have innovated to replace the use of platinum with other material and processes.

South Africa: What happens in South Africa doesn’t stay in South Africa, at least when it comes to platinum. Because it is one of the biggest sources of platinum, events like economic downturns or mining strikes could adversely affect supply, further driving the price of platinum upward.

Palladium: Industries like the automotive industry are finding ways to use palladium in place of platinum, as palladium could be more affordable. The more that platinum could be replaced by materials like palladium, the lower the demand will go, and that might end up driving the price down.

Investor Speculation: As the demand for platinum grows amongst investors, its price could also rise. As experts often recommend holding 5% of assets in precious metals, platinum and gold could see steady gains particularly as people cash out of cryptocurrencies.

How is platinum mined and refined?

Platinum is naturally occurring in placer deposits, which are areas that have a high concentration of heavy minerals. However, miners typically work on extracting this metal from two ores that contain platinum: cooperite and sperrylite. The extraction of platinum from the ore could take a few months, and up to 12 tons of ore may be required to create a single troy ounce of platinum. This is done by a process referred to as froth flotation. During this process, the ore is crushed and placed into water that contains reagent.²

Air is then pumped through the water and ore so that the platinum particles will attach to the oxygen and then make their way to the surface as part of a froth that could be skimmed off. The powder is dried and heated to more than 1500°C in an electric furnace. Then more air is pushed through in order to remove sulphur and iron.

To extract cobalt, copper, and nickel, workers will use both chemical and electrolytic techniques before a mix of hydrochloric acid and nitric acid is utilized for dissolving the platinum and making chloroplatinic acid. Using ammonium chloride, the workers can then transform that chloroplatinic acid into ammonium hexachloroplatinate that is then burned in order to create pure platinum.

When this extensive—and costly—process is not used to derive platinum from a primary source, the metal could also come from a recycled source.

What are the main reasons to invest in platinum?

Like gold, platinum is a popular metal that you can invest in to diversify your portfolio and help secure your financial stability in the case of inflationary fluctuations. The price of platinum may fluctuate more than that of other metals, particularly because so much of the supply comes from South Africa, and it is such a highly sought-after metal that can be used in a variety of applications. There are a few good reasons why this precious metal has become popular amongst investors. Those reasons include basic supply and demand.

Platinum is a metal that is used around the world. It is not available in abundance, and it takes a lot of money and energy to refine a small amount of platinum. Because the supply is limited, despite the metal being mined from various places around the globe, platinum is considered more rare than silver and gold. And in addition to current supply being on the low end, there is also a level of uncertainty regarding how much platinum will be available in the future as well.

Combine that limited supply with a growth in the demand for valuable platinum and you have a recipe for high prices. After all, platinum is a sought-after metal both in the world of investors and in various industries across the globe.

How should you invest in platinum? Are platinum coins a good investment?

Physical Platinum: When it comes to how to invest in platinum, physically owning it is a great way to add it to your portfolio. So this means that you could invest in platinum bars, which are popular amongst investors, as well as platinum coins. Bars are often sold in smaller sizes, making them more accessible to new investors, and you could invest in coins that are produced by government mints like the Royal Australian Mint and PAMP Suisse. You can also look for Platinum Canadian Maple Leafs, Platinum Chinese Pandas, Australian Koala Coins, and Platinum American Eagles if you are searching for platinum bullion coins to invest in.³

Coins tend to be quite popular for those who are interested in investing in platinum because they could be more affordable than platinum bars, and they might also be easier to store because they are small. Generally, platinum bullion coins are a convenient choice, especially for new investors, as they are easy to purchase and store. They may also hold particular value in the numismatic market. If you invest in a greater amount of coins rather than investing in larger units like bars, you might have more flexibility when it comes to liquidating your platinum for cash. As with gold bars, purchasing your platinum bars from a reputable seller, and ensuring that the bars are branded is important for ease of selling in the future.

Pool Unallocated Platinum: Another way to invest in platinum is by letting a brand like ABC Bullion hold your physical metal on your behalf. This is referred to as pool allocated platinum. Your holdings will be backed by the physical metal, but the platinum will be kept in custodial storage, with insurance, at no cost to you. For these reasons, this investment option is affordable and convenient.

Platinum ETFs (Exchange Traded Funds): You can invest in platinum via ETF, but be sure to check the investment structure of the fund to ensure that it is suitably backed by physical platinum. Bear in mind that investors in ETFs have no direct claim on the underlying investments or assets, and the entire fund may be traded or liquidated at any time.

Platinum: a precious metal that’s popular for many reasons

Considering how durable, versatile, and attractive platinum is, it’s no wonder that it is in such high demand. In addition to investing in platinum jewellery that you can wear, you could also make a wise investment into platinum bars and coins, both of which could help you enhance your financial portfolio for additional security and peace of mind during tough economic times.

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