As the popularity of gold and silver continues to shine, Costco has recently added platinum bars to its precious metal lineup. While platinum may not have glittered as brightly this year, its fundamentals are looking solid. But is it worth adding to your investment portfolio?
The Rarity and Value of Platinum
Platinum is a “newer kid on the block,” according to Edward Sterck, director of research at the World Platinum Investment Council. Identified in the 19th century, platinum is about 30 times rarer than gold, yet many investors are less familiar with it. Currently, the platinum investment market is still a fraction of that for gold and silver, which can make it a bit of a mystery for potential investors.
Despite a dip in prices—down about 1.5% year-to-date—interest in platinum has surged. In the first half of this year alone, investments fueled demand for around 579,000 troy ounces of platinum, primarily through ETFs. In contrast, gold and silver prices have jumped 29% and 32%, respectively.
Supply vs. Demand
Last year, platinum demand outpaced supply, and this trend is expected to continue. Analysts project that the deficit will widen in 2024. However, the market’s current underperformance may stem from its unique position as a green metal, largely used in catalytic converters in the automotive industry. Between 30% and 44% of platinum demand comes from this sector, making it particularly vulnerable to shifts in the auto market, especially with the rise of electric vehicles (EVs).
Interestingly, hybrid vehicles, which often require more platinum, are gaining traction as conventional car sales remain steady. As automakers shift focus back to hybrids, the demand for platinum could surprise many.
Challenges to Supply
The supply of platinum is also constrained. It’s typically mined alongside other metals, and with the recent downturn in palladium and rhodium prices, mining companies are feeling the pinch, limiting platinum extraction. Compounding this, frequent power outages in South Africa—responsible for about 70% of the world’s mined platinum—have hindered production.
Additionally, the recycling of platinum from scrapped cars has been on the decline. As vehicles remain on the road longer, the average age of cars in the U.S. reached a record high of 12.6 years in 2024, according to S&P Global Mobility.
Future Price Projections
Despite these challenges, analysts are optimistic about platinum’s future. J.P. Morgan forecasts prices could hit $1,200 per troy ounce by late 2025, while Citi anticipates an increase to $1,100 within the next year. Factors such as the Fed’s potential interest rate cuts could further stimulate car purchases, driving demand for platinum.
Considerations for Investors
Before you rush to buy platinum bars from Costco, keep in mind that selling physical platinum can be trickier than trading ETFs. Abrdn’s Robert Minter warns that investors could lose around 10% of their metal’s value when selling to dealers due to the risks involved. It’s essential to research both the buying and selling aspects of your investment.
In conclusion, while platinum can be a valuable addition to your investment portfolio, Costco may not always offer the best deal. Weigh your options and do your homework before diving into this precious metal market.
hii Aditi Sahu this side..
As an author and writer specializing in investment and finance , I am dedicated to delivering insightful articles and news stories that inform and engage the investment community . My focus is on providing timely and relevant content that covers market trends , innovative strategies , and key financial development . My goal is to equip investors with the knowledge and insights needed to make informed decisions and succeed in a dynamic financial environment.
