Hedging a portfolio with precious metals is a common strategy by those hoping to offset declines in stock prices and currency. Gold is the most popular precious metal to invest in, followed by silver at a distant second. Few people seriously weigh options to invest in platinum, even though increased industrial demand in the future could dramatically drive up the metal's price.
Platinum and Catalytic Converters
The main use for platinum, at present, is in the creation of automobile catalytic converters. Catalytic converters play a major role in reducing emissions from cars. Changes in environmental and regulatory law could lead to requirements to make more sophisticated catalytic converters in order to further cut back on emissions. Advanced systems would be necessary to reduce harm to the air and the ozone. Mandatory increased productions of newer catalytic converters could have a major effect on the demand for platinum and, hence, drive up its value.
Interest in Electric Cars May Produce Spikes in Platinum Prices
Environmental consciousness has led to the rise in interest in electric and hybrid-electric cars. Fuel-cell vehicles are among these offerings, and they rely on a significant amount of platinum to be manufactured. If demand for fuel-cell vehicles increases, so will the demand for platinum.
The Shale Gas Connection
In the United States, the shale gas boom has made fuel cheaper than its price several years ago. Shale is not difficult to procure, but a significant amount of exploratory machinery is required to find and extract the gas. One of the critical metals used to manufacture this equipment is platinum. As more shale is discovered and more land is opened for shale drilling, more machinery is going to be required. Boosted demand for platinum components is likely to increase the price of the metal.
Discussing Platinum Investments with a Financial Planner
For those not sure of the viability of investing in platinum, discuss the matter with a financial planner who specializes in private wealth management. An experienced planner will discuss both your long-term and short-term investment goals and, at your direction, examine emerging trends in the platinum market. The planner can then advise:
- Whether or not investing in platinum is a good idea.
- How much, if any, platinum should be invested.
- What particular platinum asset is best procured.
- What amount of an overall portfolio should be dedicated to platinum.
Through such expert advice, making the right decisions about entering (or avoiding) the platinum market becomes possible.
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