Indian investors have always had a fascination towards precious metals and stones owing to their hedging ability. While investing in gold and silver has been going on for a long time, another investment avenue that is blooming since the past few years is the ?noble metal?, or platinum.
Although platinum has a relatively short financial trading history associated with it, it is slowly becoming one of the favorite investment platforms for Indian investors. Investing in platinum not only helps diversify the investment portfolio, but also provides a smart long-term investment strategy.
Platinum is available in the physical form as collectable coins, while financial options are available globally, including active trade in the National Spot Exchange in India.
Platinum vs gold
Less than a decade ago, platinum prices were exponentially high and were nearly 150% the price of gold. With an extended bull run in gold, coupled with global recession in platinum manufacturing countries as well as industrial sectors, platinum prices have come down to nearly the same level as gold.
As of first week of November, platinum was trading at R3,256 per gram compared to R3,134 per gram for gold. According to industry experts as well as financial analysts, platinum is expected to rally around these levels for the next few months till economic recovery is back on track. The existing low prices of platinum, however, offer great investment opportunities to the smart investor.
Platinum vs diamond
Platinum and diamonds have always been on the radar of the rich and famous. With gold prices reaching astronomical highs, more and more Indian investors are now looking at diamonds and platinum as an equally lucrative investment opportunity.
Diamonds are available in the physical form and not every investor is aware of the cut and clarity in the absence of hallmarked diamonds, which are few and far in between. Platinum, on the other hand, has no such problems and can be traded on NSEL in the electronic form, while physical delivery is controlled by the Platinum Guild India.
Investment opportunities
With its rising popularity, the National Spot Exchange (NSEL) e-Platinum launched the e-platinum trading platform under its e-Series products in April 2012.
E-Platinum: The e-platinum platform has slowly been gaining popularity among the investors. It opens up opportunity for the investors to buy units of platinum electronically in multiples of 1 gram with the option to sell, retain or take physical delivery through the platform.
Just like e-gold and e-silver, e-platinum also allows investors to avail physical delivery of platinum in various denominations, usually in granules form imported from London Platinum and Palladium Market (LPPM)-approved suppliers. As of now, physical delivery of platinum is limited to Delhi, Mumbai, Jaipur and Hyderabad, but more cities are being added by NSEL.
Bars and coins: For those who want to store the metal in its physical form, platinum bars, coins and bullions are available across various centres, including nationalised and private banks as well as authorised dealers. Physical delivery of platinum is available in various weights, including 1 gram to 100 grams with a purity of 99.95%. Since physical buying of platinum is still in the nascent stage in India, individuals must check with their vendors for authenticity certificates and buyback deductions.
Platinum futures contract
Platinum can also be invested into in the futures market as the Multi Commodity Exchange (MCX) allows buying facilities for Platinum Futures Contract (1 gram). Since the futures market is highly volatile and has inherent risks attached, such investment avenues are only recommended for the advanced traders and investors.
Future outlook
Even though platinum prices may appear bearish for now, the price of platinum is expected to rise in the near future as platinum jewelry markets get more evolved. In fact, the Mineral Exploration and Development Report in its 12th Five Year Plan Period projected that platinum demand in India will reach 80 tonne by 2017. Also, with the increase on strength of the automobile industry globally, platinum may well retain its high financial strength and offer a perfect investment tool for serious investors.
Analysts and financial experts may have a different outlook on the short-term prospects of platinum, but most agree that with the low costs of the metal, this is a perfect time to invest in e-platinum in the demat form, which emulates the price of physical platinum in the precious metal market.
