After gold and silver, platinum has been a popular precious metal for trading and investing in. All those metals are used in jewelry, and platinum also has extensive industrial applications. Traditional use of platinum is in the catalytic converters currently used to clean the exhaust from automobile internal combustion engines.
The global push for green energy has also spurred the growth of emerging technologies that make considerable use of platinum group metals (PGMs). This has the potential to make platinum mining stocks a great long-term investment. For example, electric vehicles (EVs) require PGMs for their lithium-ion batteries.
Furthermore, another application for PGMs has recently emerged for a new type of automobile known as a hydrogen fuel cell vehicle. As society transitions to more sustainable energy sources, green hydrogen technologies promise to transform the energy industry, so platinum and the other PGMs are expected to play an important role. Benzingaâ€™s picks for the best platinum stocks for investment purposes are highlighted below.
Overview: Platinum Stocks
Platinum is a ductile, malleable metal with a silvery-white appearance. It has the symbol Pt and the atomic number 78. The precious metal is among the least reactive metals and has high resistance to corrosion even at elevated temperatures. This qualifies platinum as a â€œnoble metal.â€
First used by pre-Columbian South American civilizations for making artifacts, native platinum can be sourced in the alluvial sands of rivers. The metal was referenced as early as the 16th century, but it was not investigated until a report was published by Antonio de Ulloa in 1748.
South Africa produces approximately 80% of the worldâ€™s platinum, which totals just a few hundred metric tons globally every year, thereby making the metal a relatively rare commodity. In addition to its major use in autocatalytic converters, platinum has a number of other uses including, electrodes and electrical contacts, dentistry equipment, jewelry and platinum resistance thermometers.
Platinumâ€™s spot price has fluctuated between $800, where it traded in June 2020, to a high of $1,310 in February 2021. The metalâ€™s current spot price is $1,067.77. Platinum and other PGMs rank among the precious metals alongside gold and silver, with their industrial uses increasing as innovation and new technologies emerge.
Despite the economic slowdown during the COVID-19 pandemic shutdowns, platinum miners and their stocks have recovered significantly, with production now approaching normal levels. Since many investors consider diversifying into precious metals a prudent strategy, buying platinum stocks could make sense, especially if you think platinum will rise in value.
Best Online Brokers for Platinum Stocks
Most brokers will let you purchase American Depository Receipts (ADRs), but if you intend to purchase over-the-counter (OTC) stocks, make sure your broker provides access to that market, and ask what commissions they charge for that type of trade. Check out a broker comparison table below.
Features to Look for in a Platinum Stock
- Type of miner
Because of platinumâ€™s rarity, most pure-play platinum mining stocks consist of small microcap companies that can pose significant risks for investors. Some investors, therefore, prefer to select major miners that obtain most of their profits from mining other metals. They might also choose to invest in automotive or jewelry manufacturing companies that use large amounts of platinum in producing their respective goods.
The underlying fundamentals of any publicly traded company tend to influence whether its stock will appreciate in the future. Take into account a companyâ€™s current profitability, its level of debt, future prospects for its products, its management and other fundamental considerations when selecting a stock to invest in. The stockâ€™s earnings per share and other fundamental metrics can serve as useful indicators when determining if a stockâ€™s price is likely to rise or fall in the future.
While smaller platinum reserves can be found in the U.S. and Canada, Russia and South Africa account for roughly 90% of world production. Most miners situated outside of those two key producing countries need to partner with or lease mines from local companies. Platinum mining can be affected by geopolitical events and natural disasters that occur where platinum deposits are located.
Are Platinum Stocks Good Investments?
With the global move toward greener and more sustainable energy and transportation options, the use of platinum and other PGMs will likely increase in the future. This could make investing in platinum miners an excellent opportunity for investors looking to profit from this technological trend, while companies that use platinum in manufacturing their products can have a notable exposure to a rise in the metalâ€™s price.
The stocks of the mining companies reviewed above also represent relatively â€œpureâ€ platinum plays, which means that the firms directly benefit from platinum mining operations, exploration and production. Among our platinum stock selections, only PLG does not qualify for Benzingaâ€™s stocks under $20 category, and they all represent solid investments in the platinum industry.
Most automakers rely heavily on platinum for the catalytic converters used in gas-powered vehicles. Automakers also own most of the patents for hydrogen fuel cells that will probably power new technologies in the industry. Jewelry makers also have a considerable exposure to the price of platinum. Companies that could have their profits hurt by higher platinum prices include automakers like General Motors (NYSE: GM) and Toyota (NYSE: TM) or jewelry makers like Tiffanyâ€™s (NYSE: TIF).
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