About Platinum Bars and Coins
Why Do People Buy Platinum?
Platinum is attractive to investors and speculators because of its scarcity. The amount of above-ground platinum available is minuscule compared to other precious metals; while global gold mining yields approximately 2,500-3,000 tons annually, the estimated global platinum production is only between 94 and 200 metric tons per year. The imbalance between supply and global demand for platinum occasionally drives the price of this precious metal to higher than double the price of gold.
The demand for platinum is sometimes high because it has unique physical and chemical characteristics that are indispensable to modern technology and automotive engineering industries. The chemical element with symbol Pt and atomic number 78, platinum is a shiny, silver-white metal whose name derives from the Spanish term “platina” (“little silver”). It is a dense, malleable, ductile, and highly unreactive precious metal, more scarce than gold or silver, and useful for many industrial purposes because of its high melting point and exceptional resistance to corrosion.
In the eighteenth century it was declared by King Louis XVI of France to be the only metal fit for kings; the difficulty of acquiring it in its purest form guaranteed perpetual exclusivity. Today, platinum retains its reputation for privilege and exceptional value: platinum albums surpass gold ones, platinum jewelry and watches tend to be more expensive, and platinum wedding anniversaries celebrate a longer commitment (70 years) than gold (50) or silver (25).
Commonly trading higher than gold but not always, platinum’s market is smaller than silver’s.
Brief History of Platinum
Native South Americans—particularly Mayans—used platinum in their jewelry. Sixteenth-century Spanish conquistadors, valuing gold more, disdained platinum to the point of even abandoning some gold mines because the exasperating white metal flakes could not be separated from the precious yellow metal easily. The platinum would not melt, for its melting point exceeds thirty-six-hundred degrees Fahrenheit (two thousand degrees centigrade).
Once explorers carried it to Europe, platinum’s scientific qualities were discovered, around 1750. In 1803 it was learned that native platinum actually consists of four elements rather than one—iridium, osmium, palladium, and rhodium— so more stringent efforts were then made to extract the purest forms of the metal from compounds.
Since then, the highly-unreactive metal has been used extensively in the automotive industry, and in the chemicals and electronics industries. It is used in catalytic converters because it effectively converts engine emissions into less harmful waste products. The rare metal also helps save lives: it is used to create pacemakers, dental fillings, and chemotherapy drugs for treating cancers, and is particularly effective at treating testicular cancers.
South African mines produce the most platinum for commercial use, extracting it from the mineral cooperite (platinum sulfide) found in alluvial deposits. Copper and nickel refining also provide some platinum as a by-product.
What are the Options for Buying Platinum?
Clients purchasing platinum coins from Texas Precious Metals may choose coins from among those minted by several of the world’s most reputable, internationally recognized mints, including the United States Mint, the Australian Perth Mint, and the Royal Canadian Mint.
From the United States Mint, Texas Precious Metals offers the beautiful, .9995 pure American Platinum Eagle bullion coin of brilliant, uncirculated condition in 1 oz, 1/2 oz, 1/4 oz, and 1/10 oz denominations. The majestic 1-ounce Canadian Platinum Maple Leaf is available from the Royal Canadian Mint as is the popular Australian Kangaroo 1-Ounce Platinum Bullion Coin, crafted by the Australian Perth Mint.
Platinum coins purchased from Texas Precious Metals are eligible for Precious Metals IRAs and are individually sealed and fully segregated from gold, silver, and palladium in private, secure storage. Metals are never commingled or allocated.
What is the Price of Platinum?
More precious than silver, platinum’s price is more volatile than gold. It fluctuates depending upon several factors. Calculation for premiums on platinum coins vary depending on current bullion market supply and demand ratios, the type of bullion products being sold, the level of government bureaucracy and taxation, and local, national, and global economic conditions.
Factors affecting the price of platinum:
- global commodity market rates
- sellers’ premiums
- supply and demand equilibrium
- taxation rates
- economic conditions
The price for each ounce of bullion consists of the metal’s spot price and the bullion premium.
- The spot price is the current price per ounce exchanged on global commodity markets.
- The bullion premium is the surcharge over the bullion’s current spot price, comprised largely of the minting cost of production.
The most significant factor contributing to a coin’s premium is the minting cost. Large platinum bars are heavier, harder to store and prohibitively expensive; therefore, people more often prefer to buy smaller denominations, and those smaller denominations must be minted. In the case of sovereign mints, another contributor is taxes, as some governments levy a duty on every coin sold to customers. Shipping costs from the mints to dealers also contribute to the premium. If the premium for a premium coin is $50, the dealer may gross $10-$15 per coin, depending on volume.