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Economic instability and inflation are leading many new investors to consider adding precious metals to their portfolios. In general, precious metals tend to grow in value as the economy experiences difficulties, and they can serve as a portfolio’s barricade to inflation.
Even if you’re not concerned about the state of the economy, precious metals also serve as an excellent way to diversify your portfolio. A portfolio without several diverse assets runs the risk of suffering terrible losses should particular events come to pass.
To be frank, the price of gold is high, though. Many new and existing precious metals investors on a budget need other viable options. Platinum and silver represent those options, as both hold their value well but are not as cost-prohibitive as gold.
Platinum is a bright, white metal often mistaken for silver due to its similar appearance. However, platinum is much rarer—15 times rarer than silver—and rivals gold in scarcity within the earth’s crust.
While platinum doesn’t have the same industrial demand as silver, it plays a critical role in several industries. A key use is in catalytic converters for vehicles, where it helps reduce harmful emissions.
Platinum is also prized for its hypoallergenic properties, making it a popular choice for jewelry and medical applications. Its ductility allows it to be shaped extensively without fracturing—more so than gold.
Platinum prices typically fall between silver and gold. For nearly 50 years, an ounce of platinum has not been priced below $200.
South Africa dominates global platinum production, accounting for roughly two-thirds of annual output. Russia is the second-largest producer but mines only one-fifth of South Africa’s volume.
Mining challenges, including environmental concerns and the depth required to extract platinum, threaten its supply. These logistical difficulties make platinum increasingly expensive to produce.
Silver is far more abundant than platinum, with annual production exceeding platinum by more than 144 times. About 26,000 metric tons of silver are mined each year.
Despite high production, silver demand—driven by industrial, jewelry, and investment uses—outpaces supply by over 100 million ounces annually. Solar panel manufacturers are particularly reliant on silver’s conductivity to improve photovoltaic cell efficiency.
Silver’s price history is notable. Between 1890 and 1970, silver prices remained low due to U.S. government price controls. Once these controls lifted, silver began trading according to market demand, with prices fluctuating between $4 and $40 per ounce.
Mexico leads global silver production, followed by China. However, Mexico’s dominance is less pronounced than South Africa’s in platinum production, producing just under twice as much as China.
| Aspect | Silver | Platinum |
|---|---|---|
| Current price per oz | $30–$35 | $900–$1,050 |
| Rarity (ppb in Earth’s crust) | 75 | 5 |
| Annual production (in metric tons) | 26,000 | 180 |
| Major producers | Mexico, China | South Africa, Russia |
| Price volatility range | $4–$39 since 1975 | $350–$2,276 since 1990 |
| Liquidity | High | Low |
| Industrial demand | Very high | High |
| Investment products | Coins, bars, rounds, ETFs | Bars, rounds, ETFs |
| Bullion purity | Up to 99.999% | Up to 99.95% |
| Storage requirements | Significant | Minimal |
| Portfolio diversification | Strong | Medium |
| Entry barrier | Low | High |
| Market size | $1.729 trillion | $245.6 billion |
Platinum’s price is significantly higher than silver’s due to its rarity and production challenges. Currently, silver trades around $30 per ounce, while platinum exceeds $950 per ounce.
Silver has a history of extreme price fluctuations. For example, its price ranged from $5 to $15 per ounce between 2000 and 2020 but reached an all-time high in 2011 during the Great Recession.
Silver’s industrial demand heavily influences its price. Emerging technologies, like advanced photovoltaic panels, can create new demand, further affecting prices. You can follow the spot price of silver here.
Platinum’s price trends closer to gold and is less volatile than silver. However, it has seen dramatic price drops, such as during the 2008 financial crisis, when it lost 66% of its value in less than a year.
Industrial demand for platinum, particularly in catalytic converters and jewelry, continues to grow. Environmental initiatives and depleting supply are likely to increase future demand. You can follow the spot price of platinum here.
Liquidity is the measure of how easy it is to convert a tangible asset into cash. Liquidity exists on a sort of continuum, where the most liquid assets are cash or cash equivalents.
The harder an object is to sell and convert, the less liquid it is. For instance, a unique piece of real estate priced for tens of millions is an incredibly illiquid asset, as it is going to be difficult to find someone who can both afford it and likes the style of the place.
From a precious metals point of view, coins are the most liquid asset class, as they are legal tender and are easily identified and authenticated for their dollar value. So, you can move silver coins, platinum coins, or other coins pretty easily.
Exchange-traded funds, or ETFs, are also quite liquid, as they are essentially shares of stock.
Platinum bars and silver rounds are less liquid because they have to be authenticated and measured before they can be sold. You can still move them, but there are extra steps before you can.
No matter what metal you choose, you have several options for your investment. Most precious metals investors prefer to buy tangible silver or platinum, of course, but there are several different formats in which these metals are available.
Furthermore, there are some options if you’d prefer not to fool with physical metal. You can also invest either in exchange-traded funds (ETFs) or mining stocks directly.
So, let’s discuss these two avenues for investing.
One of the biggest advantages to buying platinum or silver is that you can hold it in your hand. Few other investments offer that same visceral tie-in. However, there are several different forms in which you can purchase or sell silver and platinum.
Silver is available as coins, as rounds, or as bars. Silver coins are the most common format, as there are both silver bullion coins and historical silver coins available for purchase.
However, there are also options for silver rounds. Rounds are coin-like discs, but are issued by private mints and are not legal tender. Thus, their value is a reflection of their silver content – nothing more.
Similarly, you can buy silver bars, if you like. These are brick-shaped blocks that usually contain 99.99% fine silver.
Platinum options are a bit more limited, both in scope and variety. There are some platinum coins available for purchase, but not as many as there are silver coins.
Platinum rounds are also uncommon. For the most part, bulk platinum comes in bars of various shapes and sizes.
In either case, as we mentioned, you have to be aware of the logistical realities of both transporting and securing these items. It’s best to have a plan in place prior to making your first purchase.
There are some options for insuring your investment, too. In some cases, your homeowner’s insurance may be sufficient to cover the value. In others, you may have to seek private insurance or pursue insurance options from the bank – if you’re using a safe deposit box.
Precious metals ETFs are funds that focus on holding precious metals in their baskets, rather than other types of assets. They offer a way to invest in silver or platinum, but in a manner more akin to purchasing shares of stock.
The value of the ETF varies according to the spot prices of the various metals within the portfolio. Here are some of the more popular ETFs for both metals:
Top Silver ETFs
Top Platinum ETFs
Another alternative for buying precious metals without the physical requirement is to buy mining company stocks. It’s a bit more indirect, as the performance of a mining company and its stock is not necessarily reflected in the overall spot price or the industry as a whole.
With this in mind, it’s important that you do your homework as you would for any regular stock before you purchase. In these cases, the notion of investing in metals themselves is almost tangential to buying mining stocks.
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Silver and platinum each offer unique advantages. Silver is affordable and in high demand, while platinum is rarer and easier to store.
Both metals are volatile, with silver showing greater price swings. Ultimately, your choice depends on your investment goals, risk tolerance, and storage capacity.
Continue exploring JM Bullion’s education section or consult a trusted financial advisor for further guidance. If you have questions about silver or platinum, JM Bullion is happy to help. You can call us on the phone at 800-276-6508, chat with us live online, or simply send us an email with your inquiries.
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