Platinum is a heavy, malleable, ductile gray-white noble precious metal.
Within the precious metal family, gold and silver are not the sole members to have caught the attention of investors and industrialists. Platinum, this “little silver” found by the Spanish conquistadors, possesses characteristics enabling various industrial applications, especially automotive. It will also have a significant part to play in the energy transition. It has as well become a more and more popular precious metal investment over the last decade.
Introducing Platinum
How was platinum found
The luster and smoothness of platinum nuggets resemble those of the other precious metals. Enough so that when it was discovered in South America by the Spanish conquistadors in the 16th century, the mistake was an easy one to make: platinum briefly stirred their interest, before being rejected and labelled it “platina”, or “small silver”. This platina, difficult to work with because of its high density, was not of great interest to the conquistadors, even though pre-Columbian civilizations already crafted their valuables from it.
But platinum interested scientists. Particularly the explorer Antonio de Ulloa in the 18th century, then the physicist William Hyde Wollaston in the 19th century. This British chemist carried out research work and is attributed with the discovery of the platinoid family to which platinum, palladium, rhodium and iridium are members.
Platinum is a heavy, resistant and stable metal. Besides its physical state, platinum also has chemical properties in common with other precious metals. This also explains various industries’ interest in it!
Platinum is even denser than gold and silver. Like copper, silver and iron, platinum is a transition metal. It is highly dense, even more so than gold (21.45 g/cm3, while that of gold is 19.32 g/cm3). It melts only at a very high temperature: 1,769°C. That is why the conquistadors soon gave up trying to work it. Gold melts in furnaces at 1,064°C, and silver at 961.8°C.
Platinum is both durable and malleable. There are also other properties of the precious metal: it is corrosion and oxidation-resistant and is immutable. It has a melting point very high so that it can withstand high heat conditions. And at the same time, it is ductile and malleable: platinum is not brittle when extended.
It is also defined by the fact that it is stainless. Pure platinum metal is extracted in small quantities today, if at all, with the exception perhaps of South Africa, the world’s largest producer. 80% of the world’s platinum still extracted comes from this southern African country. The largest platinum reserves are in Johannesburg and Rustenburg, where the world’s largest platinum mines are located.
The rest is mined in Russia, Canada, and the United States. In addition to these amounts mined, it can be noted that this precious metal is also mined as a by-product of copper and nickel mines.
Then electrolysis is used to eliminate the more noble platinum from the less pure nickel. This type of process for metal extracting and purifying is named refining. Platinum can also be made in the laboratory by annealing hexachloridoplatinic acid: the metal is deposited in the form of a platinum sponge.
Five metals belong to the platinum group. This is because the chemical behavior of all five metals is very much like that of platinum, and separation and purification were formerly almost impossible. Iridium, osmium, palladium and rhodium were all discovered in 1803, with ruthenium coming along shortly after in 1844.
More than 3,000 tonnes of gold were produced worldwide in 2023 (statistics from portal Statista). Platinum production totalled only about 180 tonnes. While gold has a stock-to-flow ratio of more than 70, the stock-to-flow ratio of platinum is about 0.9, which means that it would only take nine months for the current platinum production to double the current stock.
In this situation, the supply of platinum from mines is approximated to be 60 times as powerful in its influence on price as the mine supply of gold. In the case of the latter, the above-ground inventory of gold, i.e. current stocks, is way more influential in setting prices.
The low stock-to-flow ratio reflects the industrial nature of platinum. Industry is the main source of demand for platinum, with the automobile industry being a key consumer in particular.
Industrial uses of platinum
Those characteristics make platinum a very sought-after metal in certain hi-tech industries, but also in the automotive industry. But did you know that platinum is also one of the materials utilized in jet engine injectors, or high-temperature furnaces? Remember: it resists melting temperatures much higher than those of gold or silver
Catalysts, for which platinum is an important component, also play a vital role. It is estimated that over 40% of global demand for platinum is for catalysts. The jewellery industry is also seeing robust demand.
This precious metal has additional industrial uses: pacemakers, heating conductors, fuel cells, thermocouples, writing points or even for use in medication for cancer treatments (chemotherapy). Platinum and palladium will also play a deciding role in the development of the use of hydrogen fuel cells. We consider cars but also trucks, trains or freighters. Platinum is used to transform gas into electricity.
These industries are by no means on their own in turning to platinum. The metal has medical uses too: in dentistry, for example, or for certain chemotherapy treatments.
Investing in platinum
Since platinum has an exceedingly high intrinsic value, it can be used as a physical investment, say, in coin or ingot form. It is rather difficult to invest in physical platinum owing to the reality that it is so difficult to obtain from dealers, so much so that even the largest suppliers can only manage to get it on an occasional basis. But many Gold IRA companies offer accounts that can hold platinum.
As with gold, there are three main options for storing platinum: in physical form, it can be stored directly at your home. It is also possible to deposit the goods in a bank or with an independent safe deposit box provider not affiliated with the banking system. Ingots, coins or other granules are suitable for such storage.
The advantage of platinum is that it enjoys high value density, and thus it is possible to hold a very high value even with a small amount of metal. In the meantime, platinum has become well known worldwide as an industrial metal, and as a result, it enjoys high liquidity. However, this value is inferior to that of gold, thanks to which platinum spreads are broader. The negative aspect of this precious metal is certainly its strong dependence on industry, in particular the automotive sector.
Platinum, a metal of the future
Like silver or gold, platinum is one of the metals whose price can be driven by industrial demand. For platinum, demand from the automotive industry is currently relatively down: petrol or diesel cars, which need catalytic converters, are not really in vogue. On the other hand, there is increasing demand for electric mobility and electricity storage. And here too, platinum is a sought-after component.
These are items related to the green hydrogen industry. This is why industrial demand alone is a strong underlying factor in the price of platinum.