Platinum

Platinum: What It Means and How It Works

Key takeaways
* Platinum is a chemical element (symbol Pt, atomic number 78) and a precious metal used in jewelry, automotive catalysts, and various industrial applications.
* It is rarer and generally harder and more durable than gold, with a silvery-white appearance that resists tarnishing.
* Investors can access platinum via futures (COMEX symbol PL, Tokyo Commodity Exchange) and exchange-traded funds (ETFs).
* Since the 2007–2008 financial crisis, platinum has underperformed relative to gold and other precious metals, affected by demand shifts and increased mine production.

Overview and properties
Platinum is a dense, malleable, corrosion-resistant transition metal prized for its stability, catalytic properties, and aesthetic qualities. Its resistance to tarnish and wear makes it popular for high-end jewelry and long-lasting consumer items. Industrially, its chemical inertness and catalytic activity are the basis for many applications.

History and production
Platinum was introduced to Europe in the 18th century and named for its silver-like appearance. Today, the majority of mined platinum comes from South Africa, with Russia as another significant producer. Global supply is dominated by a small number of mines and regions, making output sensitive to labor, political, and operational factors.

Major uses
* Jewelry: Favored for engagement rings and fine jewelry because it retains a white sheen without plating and withstands wear better than many alternatives.
* Automotive: A key component in catalytic converters, where platinum helps reduce toxic exhaust emissions from internal combustion engines.
* Industrial: Used in laboratory equipment, electrodes, thermometers, dentistry, and electronics because of its stability and conductivity.
* Recycling: Scrap catalytic converters are collected and processed to recover platinum and other platinum-group metals (PGMs), creating an active secondary market.

Markets and investing
* Futures: Platinum futures trade on exchanges such as COMEX (symbol PL) and on the Tokyo Commodity Exchange, providing instruments for hedging and speculation.
* ETFs and equities: Investors can obtain exposure through commodity-focused ETFs and shares of mining companies that produce platinum.
* Price history: Platinum historically traded at a premium to gold but lost that premium after 2008. A combination of weaker industrial demand during economic downturns, stronger investment inflows into gold, and expanded mine output—particularly from South Africa—contributed to prolonged underperformance versus other precious metals.

Supply and demand dynamics
Demand for platinum comes mainly from the automotive and jewelry sectors, with additional consumption in various industrial processes. Supply is concentrated geographically, so changes in production (mine expansions, operational disruptions) or shifts in demand (substitution among PGMs, changes in automotive technology) can materially affect prices.

Why prices have lagged
After the 2007–2008 crisis, investor appetite shifted toward gold amid economic and monetary uncertainty, reducing speculative demand for platinum. Increased supply from South African mines since the mid-2010s also added downward pressure on prices. As a result, platinum has generally trailed gold, silver, and palladium in recent years.

Conclusion
Platinum remains a valuable and versatile metal with important industrial and decorative uses. Its market is shaped by concentrated supply, industrial demand—especially from the auto sector—and investor preferences. Those considering exposure should understand both the metal’s unique physical properties and the economic and supply-side factors that influence its price.