Why Is Gold More Expensive Than Platinum?

Key Takeaways
• Gold’s higher price stems from its popularity, stability, and liquidity as an investment.
• Platinum is rarer but more volatile, less liquid, and heavily tied to industrial demand.
• Platinum’s supply depends largely on South Africa, making it sensitive to disruptions.

Gold is the most expensive precious metal, but its status as the reigning king is a bit of a conundrum. After all, it is not the rarest of the metals – in fact, platinum is estimated to be as much as 30 times rarer than gold.

It is also arguable that gold is aesthetically more beautiful than platinum, as platinum’s white gleam is certainly striking enough. So, absent anything obvious, let’s talk about why gold is significantly more expensive than platinum.

Gold is Growing Popularity

The first thing that pushes the price of gold into the stratosphere is its popularity as an investment vehicle. It is undeniable that gold is the go-to precious metal for investors of all stripes.

In fact, it is the most-referenced vehicle for investing as a hedge against inflation. Since inflation has been on the rise in the past two decades – and especially in recent years – an increasing number of people have been turning to gold to protect the value of their portfolios.

There’s also an additive effect to all the buying of gold, too. As more people buy gold, more people notice the increase in price and invest in (more) gold themselves.

In other words, the price of gold is in a sort of positive feedback loop. Were gold not to be a tangible and stable store of value, there might be cause for concerns about a bubble.
Platinum is More Volatile Than Gold

Now, platinum is not a disrespected precious metal at all. In fact, the price of platinum per ounce has exceeded that of gold at times – most recently, in 2014.

However, it is also a much rarer and much more volatile investment. Because it is traded much less frequently than gold, its price is more prone to wild and unpredictable swings.

Thus, investors who are risk-averse have a much better time with gold’s relative stability. Considering that most investors seek out precious metals to diversify and balance their portfolios, they are more likely to choose a vehicle with lower volatility.

Gold is More Liquid Than Platinum

Another issue that may affect platinum’s lower value is related to its volatility. Lower trading volume means that platinum is considerably less liquid than gold.

In other words, it may be much more difficult for you to find a buyer or seller for your platinum than it is to find trading partners for gold. If you have large quantities of platinum, you may have a tougher time exchanging it for fiat currency, which could be a problem for investors if they want to have greater flexibility to shift between investments or take profits on their appreciating assets.

Factors Driving Platinum Volatility

Platinum’s lower trading volume is not the only factor that makes it a less predictable investment. There are two logistical situations that also make platinum a more unstable commodity.
For one thing, platinum is like silver in that there is tremendous industrial demand for it. Platinum is a key component in the catalytic converters found in automobiles, so its value can be negatively affected when economic pressures cause lower demand for new cars.

Furthermore, platinum’s industrial demand is uncertain because electric vehicles do not require catalytic converters. So, it remains to be seen whether platinum will retain its appeal to industry and maintain this demand as a sort of backstop to its value.

At the same time, platinum’s rarity is at issue because of the high concentration of its ore in one nation. Although many countries mine platinum, none of them produce platinum ore in amounts that even approach those of South Africa.

South Africa is responsible for mining roughly 70% of the world’s platinum and recovers nearly six times more than any other country. As such, the supply of platinum is much more sensitive to mining disruptions of any kind.

In short, platinum remains less expensive than gold now because it’s not as popular and, to some degree, it frightens investors away with its fragile price stability.

Is Gold Is too Expensive?

Unlike gold’s relationship with silver, there is no defined rule of thumb for the gold-platinum ratio. Gold and silver investors can make use of the gold-silver ratio’s 80/50 rule as a quick way to consider whether the two metals are priced appropriately.

Gold and platinum have a much rougher relationship. They are appropriately priced when they are in or around a 1:1 ratio in terms of price.

At present, the gold-platinum ratio is well above 2.5/1, and has flirted with 3:1 at times. In other words, an ounce of gold is more than 2.5 times as valuable as an ounce of platinum at present prices.

Whether this ratio indicates an undervaluation of platinum or an overvaluation of gold (or both) is subject to your own interpretation and research. As a rule, though, a higher ratio is an indicator of geopolitical uncertainty, so adjust your investing carefully.

Related Articles:
• What Causes The Price of Gold to Drop
• Factors That Influence Gold Price Highs
• How Does the Bid, Ask and Spread Work
• How Does the Gold to Silver Ratio Work

How to Buy Gold or Platinum

Regardless of whether you want to increase your stores of gold or platinum, we’re here to help. We have gold available in a myriad of presentations, including coins, rounds, and bars. Check our gold page to get started or use the dropdown menu under gold if you already have a format for your gold in mind.

Platinum products are a bit more limited, but we still have plenty to offer. Our platinum page reveals coins and bars, and many of them are products of the world’s top sovereign and private refiners and mints.

In either case, you can get in touch through our online store. If you need some help or still have questions, please reach out via phone at 1-800-276-6508. We are available to assist you Monday through Friday, between 8 AM and 6 PM CST.