Investing in Platinum - Is Platinum a good Investment - Satori Traders

Investing in Platinum - Is Platinum a good Investment

In today’s video presentation I take an in-depth look at the price charts of Platinum in monthly, weekly, and daily time frames. I also compare investing in Platinum against the other Precious metals: Palladium, Silver, and Gold. The presentation started with some of my random thoughts about Platinum:

• Platinum vs Silver vs White Gold – From the perspective of picking jewelry, this is a common comparison. Palladium is also used for jewelry although, perhaps, it is not as common as the other three metals.
• Platinum vs Palladium vs Silver – From the perspective of picking a white Precious metal for Investment purposes, these are the common choices. Rhodium also falls into this category but it is not a common choice for investors.
• IRS allows 4 Precious metals in tax-advantaged retirement accounts like Gold IRAs: Gold, Silver, Platinum, Palladium.
• The average person is unable to differentiate between the three white Investment metals: Platinum, Palladium, and Silver. If they were holding Coin blanks (i.e., unstamped Coins) of each metal, they would be unable to differentiate between the three metals, much less identify which one was which.
• These are the spot prices for the three metals on 09/26/2024: Silver $32, Platinum $996, Palladium $1053. Given that most people could not tell one Precious metal from another, how are Platinum and Palladium worth 30 times as much as Silver? This price differential makes me question why anyone would choose the expensive metals over Silver.
• Potential for price gains – When the price of Gold rises, Silver has a tendency to outperform Gold on a percentage basis. All of the Precious metals are going to follow the price of Gold higher, but it is likely that Silver will gain the most. Why?

• Let’s assume that Gold will remain the most expensive of the four Precious metals we are discussing and that Gold’s price is fixed at its current level.
• In that scenario, Platinum and Palladium can only increase in price by 2.6x while Silver can increase by 81x. Another way of expressing this idea is that Silver has more room to run as it chases Gold higher.

• History of Platinum and Palladium as monetary mediums – These Precious metals have essentially no history as circulating Currencies. For a brief period of seventeen years (1828 to 1845), Russia issued Platinum Coins for usage as Currency. These Coins were removed from circulation for two reasons:

• Platinum is hard to work with in comparison to Silver and Gold which are more malleable and ductile than Platinum.
• Platinum resembles less expensive metals like Silver. In other words, people were confused by the Platinum Coins because they looked like Silver Coins. Note that this historic fact supports my premise that people are unable to differentiate between the expensive white Precious metals (Platinum, Palladium) and Silver.

Industrial uses

• Platinum & Palladium – The primary use case for these white Precious metals is as catalysts in the catalytic converters for gasoline powered automobiles.

• Catalytic converters account for about 43% of industrial demand. Notice that the trend towards electric vehicles could result in a dramatic reduction in demand for these metals because electric vehicles don’t use catalytic converters.
• After catalysts, the next greatest demand for Platinum and Palladium is Jewelry at around 17%.
• Additional uses for these metals: Jewelry, dental, electronics, pollution control.
• Note that with the exception of automotive catalysts, there are other metals that can be substituted for Platinum and Palladium in most use cases.

• Silver

• Electric solder – Because of Silver’s high electrical conductivity it is widely used as solder in electronic circuitry. One of the side-effects of this usage is that a little bit of Silver is thrown away when the electronic device reaches end of life because the Silver cannot be recovered in an economically viable manner.

• A few drops of Silver being thrown away may seem trivial, but consider this: 130 million smart phones are thrown away ever year and each of those phones contains some amount of Silver.
• Because Silver is thrown away instead of being recycled, the amount of above-ground Silver is continually decreasing. In fact, the global Silver market has been operating in a deficit for the past three years. The shortage of metal is coming from the stockpiles of Silver mined in the past.
• In contrast to Silver, most of the Gold that has ever been mined remains above-ground because the value of Gold makes it economically viable to recover.

• Solar panels – A typical solar panel contains about 3/4ths of an ounce of Silver. Global demand for solar panels in 2022 resulted in 140 million ounces of the white Precious metal being consumed. Solar panels can last for 20 to 30 years but they are thrown away at their end of life. Like smart phones, there isn’t enough Silver in a solar panel to make the recovery of the metal economically viable. Note that the demand for solar panels has increased since 2022 and is expected to increase dramatically going forward.
• EVs – Current generation electric vehicles contain roughly one to two ounces of Silver. Future generations are expected to use far more Silver as the Precious metal is incorporated into the batteries. For example, Samsung recently announced a high-performance EV battery which is expected to use about 1000 grams of Silver (30 troy ounces) per vehicle.
• Medical – Silver is a natural antibacterial and antiviral. These properties make it ideal for wound care, prosthetic devices, surgical appliances, and catheters.
• Consumer products – Because of its antibacterial / antiviral properties, Silver is used as a coating in consumer appliances like washers, dryers, and refrigerators where germs might otherwise proliferate.
• High-performance batteries

• Silver oxide button batteries are widely used in watches, hearing aids, medical devices, and precision instruments. These batteries are desirable because they have a high energy-to-weight ratio and stable power output as they discharge (i.e., the power level doesn’t fluctuate).
• Silver zinc batteries are used in military and space applications where high energy-to-weight, stable power output, and the ability to withstand numerous charge/discharge cycles are important properties.
• Silver zinc batteries are the reason that every Tomahawk missile contains 40 pounds (500 troy ounces) of Silver.

• Protection from small arms fire – Silver is ductile which means it bends upon impact instead of remaining rigid. This property makes it ideal for use as a shield in military aircraft that could be subject to small arms fire.

• EMI/RFI shielding – Silver is one of several materials used in electromagnetic and radio frequency shielding for sensitive military electronics and stealth coatings.

• Gold – Gold is used in dentistry, aerospace, and electronics. Because of its cost, other metals are used when possible and most of the Gold used in industrial applications is ultimately recovered and recycled.

I was asked to perform an update on the price performance of Platinum but this video presentation ended up being more of an explanation of why Silver is a better Investment than the other white Precious metals. Watch the video for in-depth analysis of the Platinum price charts. https://satoritraders.com/blog/investing-in-platinum-is-platinum-a-good-investment/