Is investment in Platinum a good Investment option?
Indian investors always had a fascination towards precious metals. Gold and Silver has been Indian’s favorite investment option. The 3rd investment option which is getting emerged among precious metals is Platinum. Platinum is slowly gaining popularity in India. There are various ways to invest in Platinum in India.
3 Ways to invest in Platinum
1) Platinum jewellery: These days Platinum bands, pendants and solitaire set in platinum are seen in get-together, engagements and weddings in India. This grey-white metal is popular in Japan, US, China for expensive jewellery. Now in India, it made its way and increasing popularity in Metro cities and urban areas. Platinum jewellery is available with all major jewelers in India. Platinum prices are more or less in comparison with Gold prices. They are sometimes highly volatile. Gold consumption in India is around 300 to 350 Tonnes whereas, Platinum consumption is only around 10 Tonnes.
2) Platinum coins and bars: Platinum is also available in coins and bars. These coins and bars are available with nationalized banks, private banks and with jewelers. These are available in denomination of 1 gram to 100 grams with 99.95% purity. However, since Platinum is just emerging as an investment option, any Platinum purchase in coins and bars should be checked with your vendors about authenticity certificates and buy-back deductions.
3) e-Platinum: Due to increasing demand of Platinum in India, National Spot Exchange Ltd (NSEL) has started e-series of Platinum in Apr-2012 apart with Gold and Silver. You can buy e-platinum which would be in demat form. You need to open account at nationalspotexchange.com and buy / sell e-Platinum. NSEL would operate between Monday to Friday with timings of 10.30 am to 11.30 pm. Minimum purchase should be for 1 gram of e-Platinum. The purity would be 999.5. You can also take physical delivery if you have accumulated for 100 grams of Platinum. However such delivery is currently available in Metro cities only.
There is another option like e-Platinum future contracts where one can buy and sell e-Platinum future contracts. Since this is for advanced traders, I would not discuss this option in this article.
How the pricing is done for Platinum?
It tracks Platinum prices from London Platinum and Palladium market which is converted to Indian Rupee.
What are the drawbacks of Platinum investment?
a) Platinum not yet gained popularity like gold: While Platinum price is more or less equal to Gold, it has not yet gained popularity like Gold. Platinum comes as 3rd option in the series where Gold and Silver ranks high.
b) Volatile prices: The price of Platinum is volatile. It fluctuates heavily with its current price due to demand and supply gap.
c) Liquidity issues: If you are buying physical Platinum jewellery, you can sell them to the same jeweler from whom you purchased. This makes Platinum unattractive.
Conclusion: Platinum is rare metal. There is global demand and supply imbalance for Platinum. There is high supply to countries like Japan, Russia, South Africa and Canada now. The prices are also increasing year on year and competing with gold prices. Mineral Exploration and Development report in its 12th five year plan indicated that the Platinum demand is expected to increase to 80 Tonne by the end of 2017 in India. Considering these facts, one can invest small amounts over a period of time to diversify their portfolio. Don’t get surprised when you see huge jump in Platinum prices in the near future. This could be a good investment option.
Readers, have you invested in Platinum? I would love to hear your experiences?
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Is investment in Platinum a good Investment option
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