Most think of gold and silver when considering physical bullion to buy. Both metals are well-known across the world and remain popular in a modern economy with various investment vehicles. But palladium and platinum are two other precious metals not often discussed – yet still extremely valuable.
Once known as ‘white gold,’ platinum is highly valued and desired due to its wide range of uses. The metal is very tarnish-resistant, is soft and malleable, and can bond easily with other elements due to its location in the middle of the periodic table.
Platinum often tends to fetch a higher per-ounce price than gold since it is several degrees rarer. South Africa and Russia are home to the vast majority of the globe’s platinum mines.
Like platinum, palladium is extensively used in the electronics industry and in critical newer technologies like fuel cells. Palladium is 30 times rarer than gold – often giving the metal new record highs as its market further develops.
While palladium looks similar to platinum, it is much lighter in weight. As a result, palladium is enjoying greater use in wedding bands for people interested in maximizing comfort with as little extra weight on the finger as possible.
If palladium and platinum look so much alike and share many of the same uses, which metal is the better option to invest in?
Is it smarter to buy palladium in 2021? Or opt to invest in platinum for the next year. Keep reading to understand the benefits of investment in each metal and how they can fit into your 2021 investment portfolio.
Comparing Palladium and Platinum Investments
Platinum and palladium have been around for millennia but have just broken into the market over the past several years. Both metals are similar but have a few notable distinctions that investors should understand.
Rarity: Palladium Wins
Platinum is rarer than gold or silver. The global supply of the metal projects to be about 1/10th of gold. If gold mining stopped today, the current supply would last for about 25 years. The world’s supply of platinum would last for just a year if mining ceased. However, estimates say palladium is still about 15 times rarer than platinum.
Palladium’s rarity and desirability are enhanced by its use in dental equipment production and for components in fine watches. Investors interested in the rarest metal (and the ensuing enticing prices that follow) should opt for palladium in 2021.
Price Stability: Platinum Wins
Historically, platinum traded higher than gold. In recent memory, the white metal has maintained a lower spot price (and has drifted far below palladium). However, platinum is less volatile than palladium due to the metal’s mining process. Nearly 80% of the globe’s palladium comes from two nations.
This makes the metal more volatile from a price standpoint than platinum, mined and sourced from a wider range of nations. From 2005-2011, the palladium price sank to $168 per ounce and eventually surged up to $858. Investors interested in stability and as few price swings as possible should opt for platinum.
Future Potential: Palladium Wins
While platinum is the better choice for those looking to avoid the pitfalls of volatility, investors eager for the greatest rate of return for next year and beyond should choose palladium. Over the last few years, palladium’s price appreciation has far surpassed platinum’s. Demand from the automotive industry for palladium only looks set to keep metal prices high for the future. Prices for palladium could increase further due to complications in South Africa, a nation where large amounts of the metal are mined.
In late March, palladium prices jumped 15% after South African President Cyril Ramaphosa announced a 21-day closure of the mining sector in response to the coronavirus. The South African mining industry is a complicated entity, governed by legislation and controlled by large amounts of regulation.
Prices could rise if future issues arise and inhibit mining, especially if business and consumer confidence continues to erode in the face of high unemployment and political tension. Palladium looks to have stronger future price potential than platinum, based on its limited mining scope and use in vital industries.
What is the Better Investment for 2021?
Both palladium and platinum are good investment options. Each metal is valuable, has a high degree of versatility, and are prized by bullion collectors for their beauty and collectability. Deciding on what metal to choose largely comes down to an investor’s risk tolerance.
Those who want to avoid price swings and large dips should choose platinum, as the metal is more stable than palladium.
However, investors eager to ride the price waves of a rarer metal should invest in palladium. Palladium, due to its exclusive rarity and use in industrial endeavors, looks to be the best metal to invest in for 2021 and beyond for those looking for the highest return on investment.
Interesting related article: “What are precious metals?“