Why I Started Accumulating Platinum Bullion In Addition To My Gold & Silver Holdings

I have been buying physical precious metals since 2008.  I started out buying silver bullion, because silver is known as the poor man’s gold and back then, I did not have the same financial means that I have today. 

The fundamentals behind silver are so bullish that it is almost a certainty that we have not yet seen just how high the price of silver could go.  Silver is so undervalued that it is not even funny!  The famous gold and silver investor Mike Maloney has been known for stating that silver is quite possibly the greatest financial investment opportunity of our lifetimes. 

Just a couple months ago silver was only $17 per ounce.  In the mining industry it is commonly known that it costs roughly $19 for a mine to produce 1 ounce of silver.  For the last 5,000 years the silver to gold ratio has always hovered around 16 to 1 (16 ounces of silver was equivalent in value to 1 ounce of gold).  This is very close to the natural ratio of silver and gold deposits in the ground.  Today the ratio stands at 70 to 1.  Just based on this ratio alone, silver should be $83 per ounce based on today’s current gold price of $1,328 per ounce.  Silver is currently trading between only $19 and $20 per ounce. 

It has also been observed by many investors and economists that there is actually less silver than there is gold above ground today.  When gold is mined, it is horded, whether it is made into coins and bars or into jewelry.  Gold does not go away, so each and every year as gold is continually mined, the above ground gold in the world continually increases.  Silver on the other hand is consumed.  It is used in many industries such as electronics, medicine and many much more.  In some cases it is actually dissolved and or evaporated into a gas through different chemical reactions, disappearing forever.  Because of the high industrial demand for silver and high mining cost (keeping profit margins low for silver mines), the supply of silver is extremely low.  This creates a perfect storm and potential for silver to skyrocket in price. 

After a couple years of stacking silver bullion and knowing that gold is often less volatile compared to silver, I started to accumulate some gold as well.  I got to the point to where I was holding about 80% silver and 20% in gold.  Gold is the ultimate metal.  It is the most basic form of money, plain and simple without question.  The ultimate safe haven/store of value. 

I knew that bullion dealers and coin shops sold platinum bullion, but I never really started paying attention to platinum until just a few months ago.  I did know that historically platinum has almost always had a much higher price than gold.  I assumed this was because platinum was rarer than gold, which is true.  VERY true actually.  I recently learned that platinum is actually 30 TIMES RARER than gold!  The other thing about platinum is that it too, like silver but unlike gold, has a very high industrial demand causing the supply to be suppressed.  Also, it takes a mine 6 months to produce 1 ounce of platinum!  They must refine about 10 tons of ore to produce just 1 ounce. 

Wikipedia.com states: 

“It is one of the rarer elements in Earth’s crust with an average abundance of approximately 5 μg/kg. It occurs in some nickel and copper ores along with some native deposits, mostly in South Africa, which accounts for 80% of the world production. Because of its scarcity in Earth’s crust, only a few hundred tonnes are produced annually, and given its important uses, it is highly valuable and is a major precious metal commodity

…Platinum is used in catalytic converters, laboratory equipment, electrical contacts and electrodes, platinum resistance thermometers, dentistry equipment, and jewelry…

…During periods of sustained economic stability and growth, the price of platinum tends to be as much as twice the price of gold, whereas during periods of economic uncertainty, the price of platinum tends to decrease due to reduced industrial demand, falling below the price of gold.”

Today the price of platinum is only about $1,064 per ounce (remember gold is at $1,328 per ounce).  As stated in the Wikipedia quote, Platinum has almost always been priced higher than gold, even double the price at times, but today the price is actually quite a bit lower.  This is a sure sign that platinum is quite undervalued right now, and with some of these fundamentals that I recently learned about the metal, it is needless to say that I will be ramping up my acquisitions of platinum throughout the foreseeable future.

I still don’t know a whole lot about platinum, but from what I have been reading in the past few weeks it looks like a smart move.  As always, make sure to do your own research before investing in anything.  I am not giving investment advice, I am just telling people what I am personally investing in and offering ideas to be explored. 

If you are looking for a good precious metals dealer, here is a place I have purchased a lot of bullion from and they carry platinum:  www.apmex.com

 

 

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