When traders log into their metatrader 4 account and consider trading precious metals, it is most likely that the metals of gold and silver first spring to mind. They are the two of the most well-known and famous metals in the world and are popular trading commodities.However, another option for traders is the greyish-white precious metal known as platinum. Its name derives from the Spanish term platino – meaning ‘little silver’ and is a rare chemical element that can be found in the Earth’s crust.It is one of the world’s most expensive commodities and is in fact even more rare than gold. Each year, miners extract around 130 tonnes of platform, as opposed to the 1,700 tonnes of gold, with the cost of mining per ounce being almost twice as expensive.
What is platinum used for?
Platinum can be found in jewellery, automobiles, and electronics. In terms of strength, it is more robust than gold, which makes it a good component in fine resistance wires and medical instruments, for example.In North America, platinum is a popular metal for engagement rings, as opposed to the white gold alternatives. This is because platinum rings maintain their shine for a longer time period, whereas the rhodium plating in white gold rings fades over time.It is also used in the automotive industry and is a key contributing metal in catalytic converters, which is an exhaust emission limiter that reduces gas toxicity and pollutants that are generated by internal combustion engines.Platinum also forms a part of thermometers, electrodes, and dentistry equipment, meaning it is a very useful metal that plays an important role in manufacturing across multiple industry sectors.
What affects the price of platinum?
Over the course of history, the demand for platinum has derived from both traders and industry, in a similar way to gold and silver.The price of platinum can be affected by a number of different factors. High jewellery demand, combined with scarce supply, drive the price of platinum to higher value levels than that of gold.Moreover, due to platinum being an important feature of catalytic converters, any downturn in the automotive industry would have a direct impact on demand.Lesser factors affecting the price of platinum include investment demand and political instability. For instance, a high gold price or weak US dollar could have a knock-on effect, by guiding investors towards platinum. Also, with most of the world’s supply of platinum being mined in South Africa and Russia, it is potentially vulnerable to unstable political and economic situations.
Why trade platinum?
Traders may look to platinum as an investment in order to diversify their portfolio. This is because it is considered to be a good way of ensuring that a trader’s portfolio is exposed to various sources of risk.As with other precious metals, platinum as a commodity often tends to hold its value, even during periods when the currency rates drop.Platinum trading is a way of expressing a bullish view on global growth, while it is also seen as a store of value and an insurance against weakness in the US dollar.
