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Investing in platinum? Here are a few tips

Last updated on: December 27, 2012 14:52 IST

Investing in platinum? Here are a few tips

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Indian investors always had a fascination towards precious metals and stones owing to their hedging ability against the rising inflation and economic uncertainties.

While investing in gold and silver has been going on, another investment avenue that is blooming since past few years is the 'noble metal' or platinum.

Although platinum has a very short financial trading history associated with it compared to other precious metals, it is slowly becoming one of the favorite investment platform for Indian investors as well.

Investing in platinum not only helps in diversifying investment portfolio, but also in providing a smart long term investment strategy.

Platinum is available in the physical form as collectable coins while financial options are available globally including active trade in the National Spot exchange in India.

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Image: This file picture shows a worker polishing a platinum pendant head at Japanese jewellery brand, Ginza Tanaka's original equipment manufacturer factory in the Chiba prefecture, east of Tokyo.
Photographs: Yuriko Nakao/Reuters

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Platinum Vs Gold:

Less than a decade ago platinum prices were exponentially high and were nearly 150% the price of gold.

With an extended bull run in gold coupled with increasing global recession in platinum manufacturing countries as well as industrial sectors, platinum prices have come down to nearly the same level as gold. 

As of first week of November, platinum was trading at Rs 3,256 per gram compared to Rs 3,134 per gram for gold.

According to industry experts as well as financial analysts, platinum is expected to rally around these levels for the next few months till economic recovery is back on track.

The existing low prices of platinum however offer great investment opportunities to the smart investor to jump on the investment bandwagon.

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Image: Ingots of 99.97 and 99.98 per cent pure platinum are placed at the Krastsvetmet non-ferrous metals plant in Krasnoyarsk, Russia.
Photographs: Ilya Naymushin/Reuters
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Platinum Vs Diamonds:

Platinum and diamonds have always been on the radar of the rich and famous.

With Gold prices reaching astronomical highs, more and more Indian investors are now looking at diamonds and platinum as an equally lucrative investment opportunity.

Diamonds are available in physical form and not every investor is aware of the cut and clarity in the absence of hallmarked diamonds which are few and far in between.

Platinum on the other hand has no such problems and can be traded on NSEL in electronic form while physical delivery is controlled by Platinum guild India.

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Image: A platinum factory.
Photographs: Reuters
Tags: NSEL , India

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Investment Opportunities in Platinum:

With the rising popularity and the bright future of platinum as an investment vehicle, the National Spot Exchange e-Platinum launched e-platinum trading platform under its e-Series products in April 2012.

E-Platinum:

The e-platinum platform has been slowly gaining popularity amongst the investors.

It opens up opportunity for the investors to buy units of Platinum electronically in the multiples of 1 gram with the option to sell, retain or take physical delivery through the platform. 

Just like e-gold and e-silver, e-platinum also allows investors to avail physical delivery of Platinum in various denominations usually in granules form imported from London platinum and palladium market approved suppliers.

As of now physical delivery of platinum is limited to Delhi, Mumbai, Jaipur and Hyderabad but more cities are being added periodically by NSEL.

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Image: Gold coins.
Photographs: Reuters

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Bars and Coins:

For those who want to store the metal in its physical form, Platinum bars, coins and bullions are available across various centres, including nationalised and private banks as well as authorized dealers.

Physical delivery of platinum is available in various weights including 1 gram to 100 grams with a purity of 99.95 per cent.

Since physical buying of platinum is still in its nascent stage in India, individuals must check with their vendors for authenticity certificates and buyback deductions.

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Image: A woman speaks on a phone inside a jewellery shop in Hyderabad.
Photographs: Krishnendu Halder/Reuters
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Platinum Futures Contract:

Platinum can also be invested in the Futures market as Multi Commodity Exchange allows buying facilities for Platinum Futures Contract (1 gram).

Since futures market is highly volatile and has inherent risks attached, such investment avenues are only recommended for the advanced traders and investors.

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Image: A man looks at gold jewellery in Amman, Jordan.
Photographs: Ali Jarekji/Reuters

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Future Outlook for Platinum:

Even though platinum prices may appear bearish for now, the price of platinum is expected to rise in the near future as platinum jewelry markets get more evolved.

In fact, The Mineral Exploration and Development Report in its 12th Five Year Plan Period has projected that platinum demand in India will reach 80 tons by the year 2017.

Also with the increase on strength of the automobile industry globally, platinum may well retain its high financial strength and offer a perfect investment tool for the serious investors.

Analysts and financial experts may have a different outlook on the short term prospects of platinum but most agree that with the low costs of the metal, this is a perfect time to invest in e-Platinum in demat form which emulates the price of physical platinum in the precious metal market.



Photographs: Tyrone Siu/Reuters
Tags: India

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