Addressing platinum as the king of metals won't be an exaggeration. The metal precedes both gold and silver in terms of prices and rarity. It is among safe investments when the global economy is faring well and offers immense gains and growth. Traders who wish to showcase their bullish view in the financial market pick the platinum trading for investment.
Beng the rarest metal goes into its advantage and makes it investment-friendly for traders.
The rarity of platinum can be understood by the fact that the metal is available thirty times lesser in quantity compared to gold. It packs multifarious usages in different walks of lives and domains. Geographically, the precious white metal gets extracted from regions of South Africa and Russia. The former has abundant availability and mines of the metal.
Besides, unlike other metals, even smiths find it difficult in tempering platinum, which adds in its price. It is arduous in moulding in shape, but due to its superb properties, the metal has broad acceptance in various industries. It includes medicine, petroleum industry, chemical, jewellery, hard discs, fuel cells, catalytic converter, dentistry equipment, electrical contacts, platinum resistance thermometers and many more.
Chemical formula and details
The symbol of platinum is Pt, and its atomic number is 78. The metal derives its name from the Spanish word Platino.
It means a little silver. The metal is unreactive, highly ductile, dense, precious and a transition metal. Platinum is the rarest element produced in the crust of Earth.
Interestingly, it comes with a hardcore corrosion protection shield, which makes it available at high temperatures. It is only available 5 μg/kg in the surroundings. The metal occurs in copper and nickel ores besides some native deposits. Also, miners extract it from alluvial sands of different rivers. More than 80 per cent of it accounts in the regions of South Africa.
However, anyone who gets exposed to its salts might feel some health hazards. Hence, maintaining some distance from it can help in avoiding the problem. But this is not the case with metallic platinum. Due to corrosion resistance property, it makes no harmful impact on the human body. Precisely, its biological nature is non-toxic.
Additional features and usage
- For producing nitric acid, platinum comes into use as a catalyst.
- Industries use it in making turbine blades, pacemakers, spark plugs, optical fibres, dental filling and LCDs.
- The compounds of platinum are utilised in chemotherapy for treating various types of cancers.
- It has six isotopes with different atomic masses.
Historical facts of platinum
The seventh century BC ancient Egyptian Casket is where the oldest specimen of platinum got located for the first time. The extraction for it happened at Thebes. The work was dedicated to Queen Shapenapit. The metal was not known until then in parts of Europe and Asia.
Some burial goods, which date back to two thousand years, tell that people situated at the Pacific coast of South America worked on platinum.
Julius Scaliger, an Italian scholar, wrote in 1557 about a metal hailing from Spanish Central America. They could not melt it down. The features indicated the existence of platinum.
Antonio Ulloa, in 1735, encountered the striking metal and was captured by the Royal Navy of England in London. By 1750, platinum became one of the most talked-about metals.
Investment in platinum
Trading platinum is a source of earning money and a profitable career. Traders can earn by betting on either of the trends, while the market goes up or down. They can bet on prediction and make gains. Here are a few ways; market players are utilising for entering and transacting in the commodity market for the precious metal:
Futures trade in platinum
In the futures market, the selling and buying of silvery-white metal happen in the future, which is months ahead of the actual trade. There are places and time already designated. The transaction here is obligated but does not offer the right to a platinum trader. Some of the top exchanges include the Tokyo Commodity Exchange, also known as TOCOM, New York Mercantile Exchange. Both exchanges trade platinum futures at a minimum contract size, which goes to 500 grams and 50 troy ounces.
Platinum futures traders and producers can employ short hedge for locking in a selling price of platinum. On the other hand, businesses or industries that require the precious metal can apply a long hedge. It helps in securing the purchasing price.
Speculators have the best chances of earning in the futures trade while they predict the trend of the platinum market. They assume the pertaining risk of transactions which hedgers try to avert with the possibility of fetching desired profit through the favourable movement of price.
Traders who speculate on the price, see opportunity when they predict the market would shoot up. They invest in the platinum commodity. Inversely, the ditch it when chances of it plunging are immense.
Platinum trading also includes accounts which offer an opportunity to traders for trying a sequester way of investing in the precious metal. Several Swiss banks facilitate the option to buy and sell platinum at will instantly, similar to trading any foreign exchange currency.
Here, the customer does not have a direct claim to the physical quantity of the metal; instead, the bank is liable to offer them money equivalent to the metal's price.
Bars and coins
It is one of the traditional and archaic ways of trading valuable metals like platinum, gold and silver. While platinum coins get minted in different forms, sizes, shapes, weights and varieties; bars are available to buyers in distinct foundries from sizes ranging from 1 oz to 1 kg.
Notably, the United States of America has been selling American Platinum Eagle coins since 1997, as they are more conducive in minting compared to other platinum coins.
ETFs are a popular way among several traders for investing and transacting platinum, precisely in the commodity market. The metal gets traded in the London Stock Exchange via ETF.
Besides NYSE also offers it for trading under the symbols PLTM and PPLT. Additionally, there are sundry exchange-traded notes (ETNs) available to market players. However, some of them work conversely to the price of platinum trading.
Contract for difference platinum trading
Trading platinum through CFDs is one relatively common. Here, an investor does not need to sell or purchase the physical quantity of the metal but can earn from the fluctuation and difference of the price that arise due to price movements.
Here, the trader is trading in the market via a broker. The brokerage firm or the broker offers real-time actions and pricing of the metal regularly from the value of actual trading. Here are some advantages packed by CFD trading to investors:-
- It is cost-effective: In CFDs, one can trade expensive metal like platinum without any extra charges; whereas purchasing or trading it physically would incur fees like transport, maintenance, taxes etc. which make trading full of hassles.
- High leveraging: Purchasing even a unit of platinum would require a huge bank balance. But through the power of leveraging, people can take a flight of hopes and get hold of massive amounts of platinum. In a mindful chance, it can spell humongous gains.
- Flexibility: CFD offers the flexibility of closing the position at any given moment to avert heavy losses while trading platinum. People can go both short and long in the market, depending on the market situation.
Reasons impacting platinum prices
Due to special features and properties, platinum remains in demand. Moreover, its rarity factor speaks for its hiked price, because the metal is not available in abundance. Hence, even when the demand is low, it will maintain a price level, making it among prefered metals to buy.
Demand in industries
It is a unique element found in the crust of the Earth and boasts of special features. Due to this, industrial demand remains all-time high for the metal. In engines of automobiles, the use of platinum is extensive. However, if the usage of motored engines finds no takers, then the rates of platinum may fall. But the chances are bleak, because who knows, if some other need may arise later on.
The comparison with gold comes naturally in the perspective of platinum because when the market is stable or steady, the rate of platinum is twice the price of gold. However, when the yellow metal takes a leap, platinum starts going down like a falling object. Hence, the two assets do not share a complimentary bond with each other.
Rarity in nature
As asserted, the metal is rarely mined and available on the planet. So, the demand is usually higher than the supply. Also, there will be the day when there would be nothing left for mining. Hence, the price would catapult to the next unimaginable level.
Benefits of trading platinum
Hitherto, the white silvery metal has mostly enchanted its benefits to owners. Here are some advantages platinum exhibits:-
- It is a pivotal element among the top catalytic converters. It is majority reliable and pounces upon environment-friendly energies and their safe consumption.
- Jewellery makes for almost 50 per cent demand of overall industry demand. The metal does not get rusted with time due to its non-reactive property against chemicals.
- Platinum has a requirement in plenty of domains including photography, small and big electrical and electronic devices, electrodes and medical equipment like thermometers.
- Medical science uses it in several research works as the treatment of chemotherapy.
Online platinum trading
Similar to trading currencies, there are no physical receipts of the product which is underlying. Depending on the convenience, people use over the counter exchange or the internet way. The transactions via OTC come under no central authority in a stock exchange of a nation. Here, platinum trading takes place directly between the seller and the buyer.
Trading hours for platinum trading
Similar to many commodities trading in the market, platinum trading initiates at 23:00 GMT on Sunday and continues until Friday night 22:00 GMT. There is a slight break, which ranges from 22:00 to 23:00.
It is noticeable that worldwide, platinum trading happens between 01:00 GMT – 17:30 GMT, from Monday to Friday. Interestingly, spreads are on a higher side during non-business hours in it.
Quotation of price
The price of the contract gets implied in cents and dollar per troy ounce.
Day platinum trading
Day trading option is the most viable way for a trader to open a position in day-trading. The precious metal can be traded at a spot price.
How to choose a broker for platinum trading?
Choosing the right broker advances the criteria of benefits. It is like winning the first battle in a big war. There are some nuances and nitty-gritty ideas which require the heed of traders. An investor should check the license number, whether the broker has regulation from any regulatory authority or not, physical address and contact number and the registration number. After finding it all, corroboration from verified websites is essential.
Getting everything right is the time to begin trading. Also, before settling down on it, utilising a demo account close to 15-30 days is better. Almost all brokers are providing the offer as one of their features. Try every option, indicator, fundamental and technical analysis. The environment on a demo account is exactly similar to real-time trading. Here are some outstanding brokers in the market:-
Read their reviews before making up the mind. Some of these are award-winning brokers and enjoy the immense trust of investors and traders.
Best platforms for platinum trading
The compatibility of a broker and platform should meet when you decide to zero-in on a platform. However, MetaTrader5 has its popularity among larger users for its advanced features sans any hassle. It is like salt, that goes well along with any dish.
Commodities are volatile in nature. Hence, before trading them, going through their past performance leads up to the power or predicting their prices. Platinum trading walks the talk similarly. Market players need to be vigilant of the theatrics, socio-political advances in different countries, the situation of economies worldwide and the latest information around the planet. They have the potential to influence the prices of platinum.
Also, knowing how stock markets, gold and other instruments and assets are faring because they work inversely to platinum trading.