Platinum: A Lucrative Commodity for Indian Retail Investors9-min read

Introduction to Investing in Platinum

Since ancient times, humans have been drawn to the luster and rarity of precious metals like platinum. Initially discovered in South America by Spanish conquistadors in the 16th century, platinum was initially deemed a nuisance due to its resistance to melting and difficulty in refining. However, over time, its unique properties made it a highly sought-after material in various industrial applications, including catalytic converters, electronics, and even medical equipment.

As global demand for platinum has increased, so has its value as a commodity. Today, investors can invest in platinum through online brokers, making it an accessible and potentially lucrative investment option. This blog will explore the world of investing in platinum through online brokers, including the top brokerages for Indian stocks, step-by-step instructions on setting up an account and buying/selling platinum, and essential factors to consider before investing. We will also address frequently asked questions about investing in platinum, so you can make informed decisions and potentially reap the rewards of this unique investment opportunity.

Best Stock Brokerages for Buying Platinum in India in April 2024

A plethora of brokerages exist that provide options for investment on commodities for Indian investors. However, amongst them, Admiral Markets and Libertex tend to be the best ones that you can consider.

Admiral Markets

Admiral Markets is a well-known online broker that offers a wide range of investment products, including platinum. The broker is regulated by multiple regulatory bodies, such as the Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC), which ensures a high level of security for investors. Admiral Markets offers a user-friendly trading platform and various account types to cater to investment needs.

Fees: Admiral Markets charges a commission of 0.04% per lot on platinum trades. There are no deposit or withdrawal fees, but the broker charges an inactivity fee of €10 per month for accounts that have been inactive for more than 24 months.

Withdrawal times: Admiral Markets processes withdrawals within 24 hours for most payment methods, but it can take up to 3-5 business days for bank transfers.

Libertex

Libertex is another popular online broker that allows investors to trade platinum. The broker is regulated by the Cyprus Securities and Exchange Commission (CySEC) and offers a user-friendly trading platform suitable for novice and experienced traders. Libertex offers competitive spreads and access to a range of investment products, including platinum.

Fees: Libertex charges a commission of 0.1% per lot on platinum trades. There are no deposit or withdrawal fees, but the broker charges an inactivity fee of $5 per month for accounts that have been inactive for more than 180 days.

Withdrawal times: Libertex processes withdrawals within 24 hours for most payment methods, but it can take up to 5 business days for bank transfers.

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Understanding Platinum as a Commodity

Commodity trading involves investing in these goods to profit from price fluctuations. Compared to other investment options such as stocks and bonds, commodities offer unique benefits such as diversification and protection against inflation.

Platinum is a precious metal with various uses in industries such as automotive, electronics, and jewelry. It is considered valuable due to its rarity and high demand. Platinum is known for its luster, resistance to tarnishing, and high melting point, which makes it useful in various manufacturing processes.

Various factors, such as supply and demand, market trends, and geopolitical factors, influence platinum prices. The supply of platinum is limited, with most of it being produced in just a few countries, such as South Africa and Russia. Fluctuations in demand for platinum in industries such as automotive and electronics can also impact its price. Market trends and geopolitical events, such as changes in government policies or trade disputes, can also affect the cost of platinum. Understanding these factors can help investors make informed decisions when investing in platinum.

Why Platinum? Commercial Value of The Precious Metal

Platinum is a rare and lustrous metal that has a variety of industrial uses. It is used extensively in the automotive industry to make catalytic converters, which help reduce emissions from cars and other vehicles. Platinum is also used in the production of jewelry, medical equipment, and electronic components.

One of the unique properties of platinum is that it is a highly effective catalyst, meaning it can help facilitate chemical reactions without being consumed in the process. This makes it an important component in the chemical industry, where it is used to produce fertilizers, plastics, and other materials.

Platinum is also a valuable investment because of its scarcity. It is estimated that the total amount of platinum ever mined would fit into a single room, making it one of the rarest metals on earth. This scarcity contributes to its value and makes it a popular choice for investors looking for a safe haven asset.

As an investment, Platinum is an excellent choice for investors looking to diversify their portfolio into commodities. One of the primary benefits of investing in platinum is that it is not as closely tied to the global financial markets as other assets, such as stocks or bonds. This means that it can provide a level of protection against inflation and currency fluctuations.

Platinum also has a low correlation with other precious metals, such as gold and silver. This means that adding platinum to your portfolio can help reduce risk and increase diversification. In addition, platinum has historically shown strong performance over the long term, making it a reliable investment option.

For Indian investors, platinum can be a particularly attractive investment option because of the country’s historically high inflation rates and currency fluctuations. Hence, investing in platinum can provide a level of protection against these risks and help preserve the value of your portfolio.

Setting up an Account with an Online Broker

Setting up an account with an online broker that allows investing in platinum is a simple process. Here, we will use Admiral Markets as an example to provide a step-by-step guide:

Step 1: Go to the Admiral Markets website and click the ‘Start Trading’ button.

Step 2: Fill out the registration form with your details, including your name, email address, and phone number.

Step 3: Choose the account type that best suits your needs. Admiral Markets offers several account types, including a demo, live, and professional accounts.

Step 4: Verify your identity and address by providing the required documents. This is a mandatory step for security and regulatory purposes.

Step 5: Fund your account by selecting your preferred payment method and making a deposit. Admiral Markets offers deposit options, including bank transfers, credit/debit cards, and e-wallets.

Step 6: You can start trading platinum once your account is funded. Admiral Markets offers a variety of trading platforms, including the popular MetaTrader 4 and 5 platforms.

When choosing the right account type for investing in platinum, Admiral Markets offers standard and professional accounts. The definitive version is suitable for most investors, while the professional account is designed for experienced traders who meet specific criteria. Both account types provide access to various trading instruments, including commodities like platinum.

It’s important to note that Admiral Markets also offers a demo account, which allows you to practice trading platinum without risking any real money. This tool can be helpful for beginners who want to get familiar with the platform and the trading process before investing real money.

Buying and Selling Platinum on an Online Brokerage Platform

Buying and selling platinum on Admiral Markets’ online brokerage platform is straightforward. Here’s a step-by-step guide to help you:

Step 1: Open an account with Admiral Markets: To start trading platinum on Admiral Markets, you must create an account on their website. The account opening process is simple and involves filling out an online form, providing personal information, and submitting verification documents.

Step 2: Fund your account: After it is approved, you need to fund it before you can start trading. Admiral Markets supports a range of deposit methods, including bank transfers, credit/debit cards, and e-wallets.

Step 3: Navigate to the trading platform: Admiral Markets offers several trading platforms, including MetaTrader 4 and MetaTrader 5. You can access these platforms from your account dashboard.

Step 4: Search for platinum: Once on the trading platform, you can search for platinum by typing ‘PLT’ in the search bar. You’ll see a list of platinum-related instruments available for trading.

Step 5: Place an order: To buy platinum, click the ‘Buy’ button next to the platinum instrument you want to trade. You’ll be prompted to specify your trade size and the price at which you wish to enter the market.

Step 6: Confirm your trade: After you’ve specified the details of your trade, you’ll be asked to confirm it. If you agree with the terms, click the “Submit” button to execute your trade.

Step 7: Monitor your trade: Once your trade is executed, you can monitor its progress on the trading platform. Admiral Markets offers real-time market data and charts to help you stay up to date with platinum prices and market trends.

Here’s a breakdown of some of the costs associated with investing in platinum through Admiral Markets:

• Trading fees: Admiral Markets charges a commission fee of 0.04% per side for platinum trading. This fee is calculated based on the total value of the trade and is subject to a minimum charge of $1. The commission fee is in addition to the bid-ask spread, which is the difference between the buy and sell price of the metal.
• Account fees: Admiral Markets offers several account types, and the fees associated with each account can vary. For example, the trade.MT5 account charges no deposit or withdrawal fees but Zero.MT5 account charges a withdrawal fee of 1%. There may also be other fees associated with maintaining an account, such as inactivity fees.
• Other costs: Depending on the payment method used to fund an account, there may be additional costs, such as currency conversion fees or bank charges. Additionally, investors should be aware of any potential taxes or regulatory fees associated with trading platinum.

Factors to Consider Before Investing in Platinum

Investing in platinum can be a great way to diversify your portfolio and potentially earn significant returns. However, before investing in platinum, it’s important to understand the risks associated with this precious metal and how to mitigate them.

Market volatility is a significant risk associated with investing in platinum. Like other commodities, platinum prices are subject to fluctuations based on supply and demand, geopolitical events, and currency fluctuations. Additionally, supply chain disruptions, such as labor strikes or natural disasters, can impact the availability of platinum and its price. Geopolitical risks, such as trade wars or economic sanctions, can also impact the supply and demand of platinum. It’s important to be aware of these risks before investing in platinum.

To mitigate these risks, consider diversifying your portfolio by investing in a variety of assets, such as stocks, bonds, and other commodities. This can help to reduce your overall risk exposure. Additionally, setting stop-loss orders can help you limit your losses in the event that platinum prices decline. Conducting thorough research before investing can also help you make informed investment decisions.

Several factors can impact platinum prices and, consequently, your investment. Changes in global demand can have a significant impact on the price of platinum, particularly in industries such as automotive manufacturing, where platinum is used in catalytic converters. Geopolitical events, such as economic sanctions or trade disputes, can also impact the supply and demand of platinum. Currency fluctuations can also impact the price of platinum, particularly if the currency in which platinum is traded depreciates in value.

Recent Updates

Platinum prices have recently surged as investors bet on potential supply shortages due to power outages in South African mines and increased demand from the auto industry and the hydrogen sector. Platinum is crucial in reducing harmful engine emissions and is also used in various industries and jewelry. The metal’s price jumped from just above $900 an ounce in late February to its highest in over a year at $1,132.17 on April 21 before easing to around $1,050 by Tuesday. Speculative investors have expanded their net long position in NYMEX platinum futures, and exchange-traded funds have increased their holdings of platinum.

Experts predict that the platinum market will experience a serial deficit for the first time this year, with demand from the auto industry expected to increase by 8%. However, prices could weaken in the short term before supply risks worsen later in the year. South Africa produces 70-75% of mined platinum supply, and the rolling power cuts could cut their output by 5-15% this year, according to analysts.

Conclusion

Investing can be a profitable way to build wealth and achieve long-term financial goals, but it is important to understand the risks involved and take a thoughtful approach. In this guide, we have covered some key considerations for beginner investors, including understanding investment options, creating a diversified portfolio, managing risk, and setting realistic expectations.

One of the most important things to remember is that investing always carries some degree of risk. No investment is completely safe, and there is always the potential to lose money. That said, with careful research, smart planning, and a long-term perspective, it is possible to build a successful investment portfolio that can provide financial stability and growth over time.

Another key takeaway from this guide is the importance of diversification. By investing in a mix of different assets, such as stocks, bonds, and real estate, you can spread your risk and minimize the impact of any single investment that may perform poorly. It is also important to regularly review and rebalance your portfolio to ensure that it remains aligned with your goals and risk tolerance.

Finally, we encourage readers to conduct further research and seek the advice of financial professionals before making any investment decisions. There are many resources available, including books, articles, online forums, and financial advisors, that can provide valuable insights and guidance. By educating yourself and seeking out expert advice, you can make informed decisions that are aligned with your goals and financial situation.