As two precious metals, gold and platinum are both seen as safe haven assets and good investments during times of economic uncertainty. However, when comparing gold vs platinum for investment, platinum currently looks more attractive and has more upside potential. There are several reasons for this:
Platinum is more scarce and has more industrial use cases
Unlike gold which is mainly used for jewelry and as a store of value, over 50% of platinum supply goes into industrial applications. Platinum plays a critical role in many high-tech and environmental products. For example, platinum is a key component in catalytic converters in vehicles and in fuel cell technologies. With stricter emissions regulations globally and growth in green technologies, demand for platinum is likely to surge. Its scarcity and wide industrial use make platinum more precious than gold currently.
Platinum prices are near historical lows relative to gold
Over the past decades, the gold to platinum ratio has averaged around 1. This means it took around 1 ounce of gold to buy 1 ounce of platinum. However, in 2022, the ratio spiked to over 1.25, meaning platinum looks relatively undervalued compared to gold. Investors can take advantage of this anomalous difference in pricing between the two metals. As the ratio trends back towards 1, platinum prices could appreciate substantially compared to gold.
Platinum has more upside potential from current levels
Gold prices are already near historical highs after the pandemic-driven rush to safe haven assets. This leaves little room for further upside. On the other hand, platinum prices remain far below their historical peaks. For example, platinum traded above $2,200 per ounce in 2008 compared to around $900 currently. As the global economy recovers and demand accelerates, especially from the automobile industry, platinum has much more potential for price increases.
In summary, with higher industrial utility, more scarcity, and being relatively undervalued, platinum looks like a better investment bet than gold in the current environment. Platinum prices also have more room to run compared to gold.