Platinum versus silver: is platinum or silver the best investment?
Markets are volatile in February 2023 and inflation is rising, which is why more and more investors are considering investing in precious metals such as gold, silver, platinum or palladium. Two of the most popular and useful precious metals are platinum and silver. Both are used in catalytic converters and general electronics and play an important role in sustainable initiatives.
Although these metals are inflation hedges and may appear physically similar, they have key differences. For starters, platinum is much rarer and has a higher melting point than silver. Platinum is trading at $1,013 per ounce against silver at $23.61 per ounce at the start of 2023.
So is it better to invest in platinum or silver? Keep reading to learn more, including the outlook for the future, what each metal is useful for, and how to set up a precious metal IRA.
Platinum versus Silver: Utility
Both platinum and silver are used in catalytic converters found in cars, electrical equipment, jewelry, and dental fillings. They are both used in batteries because they are good conductors of electricity.
Platinum is a denser and heavier metal with a higher melting point than silver. These characteristics make it more resistant to corrosion and chemical reactions. Platinum is less susceptible to toxicity than silver.
Due to these properties, platinum has more uses in medicine. For example, platinum is needed in medical devices such as pacemakers, catheters, and stents. It is found in cancer drugs such as cisplatin, carboplatin and oxaliplatin.
Silver is a softer metal with a lower melting point, which makes it more suitable for jewelry. Compared to platinum, it has a greater ability to reflect light, which is why it is more commonly found in silverware and mirrors.
Platinum versus silver: what is the best hedge against inflation?
Both metals are inflation hedges because they are tangible and have a finite supply. These factors make them more popular in times of high inflation. Their prices may be influenced by factors such as supply and demand, geopolitical events, government regulations, new uses and general market conditions.
Silver might be a better option for investors who have more limited budgets because the price per ounce of silver is much lower than that of platinum. However, the silver market is smaller and more volatile, which can lead to large price swings. Despite these price fluctuations, silver returned 15% from 1976 to 1978, years marked by high inflation.
Platinum is much rarer than silver. It is 30 times rarer than gold and has wider applications including medical devices, drugs, catalytic converters and electronics. It returned 45% from 1976 to 1978. Platinum might be a better option for investors who have more funds to invest and want more stability.
Platinum versus Silver: Future Prospects
So what is the future outlook for platinum versus silver? Both have a positive future, especially with new government regulations. For example, President Biden passed the Cut Inflation Act, the largest ever federal investment in renewable energy. This law will increase the demand for platinum and silver since they are both found in catalytic converters and solar panels.
Platinum had its best quarter since 2008 in the fourth quarter of 2022. One of the main reasons for its rise is an expected shortage in 2023, with demand growing by 19% and supply increasing by 2%.
Platinum could see higher demand for its uses in healthcare and jewelry. China recently bought a record amount of platinum. Platinum has gained more than 13% in 2022, beating gold, silver and palladium.
Like platinum, silver is experiencing shortages, which could increase its value. According to Nicky Shiels, head of metals strategy at precious metals firm MKS PAMP, “Silver is in short supply…and there is a noticeable decline in available physical inventory held in New York and physical hubs across London, more than gold”.
Shiels said a silver shortfall of more than 100 million ounces could occur over the next five years, driving up prices.
Besides platinum and silver, other alternatives to precious metals are available. For starters, gold is the most famous precious metal and has been used throughout history to hedge against economic uncertainty and inflation. It has many uses, including dental fillings, semiconductors, cell phones, and other types of electronic devices.
One of the easiest ways to start investing in gold is through gold coins or exchange-traded funds (ETFs). Gold coins like the American Gold Eagle coin are found with partners like Red Rock Secured. Gold ETFs can be traded with any online broker, often commission-free. Some gold ETFs track the spot price of gold, while others hold gold mining companies like Barrick Gold Corp. (NYSE: GOLD).
American gold eagle coins
Palladium is another precious metal similar to platinum. It is rarer than gold and is used in catalytic converters, electronics and jewelry. It is trading at $1,566 per ounce on February 2, 2023. You can purchase 1 ounce palladium bars through Red Rock Secured.
Best platforms that sell platinum and silver
Some of the best precious metal brokers include Birch Gold Group, Red Rock Secured, Advantage Gold and American Hartford Gold. They are all BBB accredited, have many positive reviews from their clients, and have helped thousands of average investors successfully invest in precious metals.
They pride themselves on simple processes like facilitating precious metals trading through their support services. They staff their help desks with knowledgeable merchants who can walk you through the process from A to Z. They offer perks like transit insurance and free IRA rollovers for new customers.
These partners offer free educational content like blogs and videos to keep you up to date with precious metals investing hacks. You can get insider information on IRS loopholes while investing in precious metals with this free eBook.
IRA investment in precious metals and gold
Gold Buying Education
Ideal for Gold IRAs, new and experienced investors
Another key added value that these partners offer is that they are all qualified to be IRA precious metals custodians. You can use self-directed IRAs to invest in precious metals tax-deferred or tax-free.
Per IRS requirements, you must arrange for a third-party custodian to hold your precious metals held in an IRA. IRA precious metals custodians can help you stay up to date with important documents, including reporting capital gains to the IRS. Each of the partners mentioned above can show you which specific coins and bars are IRS approved for your self-directed IRA.
Is platinum or silver the best investment?
So, is it better to invest in platinum or silver? Platinum is a higher value metal that is rarer and has a wider range of industrial uses. It has generally outperformed silver and prices could rise due to severe shortages.
Silver, on the other hand, is more volatile, which could lead to buying it at a discount. You can take advantage of larger price swings if you are a short-term trader. Silver is expected to increase in value over the next few years due to the Inflation Reduction Act, shortages, and its many industrial uses.
Ultimately, both metals can be fine in times of high inflation, but it really depends on your risk tolerance, goals, and market conditions.
Frequently Asked Questions
What can damage platinum?
Chemicals like chlorine, commonly found in swimming pools, can ruin the shine of platinum and lead to discoloration.
Which banks buy silver?
The biggest banks that buy silver are JPMorgan Chase & Co., Citibank, Bank of America and Goldman Sachs.