Platinum

Platinum: Definition, Uses, and Trading Insights

Key Takeaways

Platinum is a chemical element and precious metal widely used for jewelry, electronics, and automobiles.
Stronger and rarer than gold, platinum remains a highly valued commodity.
Investors can trade platinum futures or invest through ETFs specializing in platinum.
Since the 2008 financial crisis, platinum prices have declined due to increased supply and lower demand.
The global production of platinum is dominated by South Africa, followed by Russia.1

What Is Platinum?

Platinum is a precious metal known for its rarity, strength, and uses in jewelry, electronics, and automobiles. First introduced to Europe in 1735, this silver-colored metal is primarily mined in South Africa and Russia. Platinum is highly durable and more resistant to tarnish than other metals like gold. Frequently used in catalytic converters in the auto industry, platinum also sees investment interest through futures contracts and exchange-traded funds (ETFs).23

Platinum appears on the periodic table of elements by the symbol Pt and atomic number 78.4

The History and Characteristics of Platinum

Spanish general of the navy and scientist Antonio de Ulloa introduced platinum to Europe in 1735. Due to its silvery or white appearance, Ulloa named the metal plantina, which means little silver. Today, platinum is mined in South Africa, which accounts for roughly 80% of the world's production. Russia is the second-biggest producer. About half of the mined platinum from China goes into jewelry, where it is desirable because it looks silver in color but does not tarnish. Platinum is also stronger and more durable than gold.56

In the United States, platinum engagement rings are a popular alternative to white gold engagement rings, which are composed of gold, alloys, and a rhodium plating that gives them a white look. But rhodium fades over time, requiring white gold rings to be replaced, whereas platinum rings maintain their gleam for longer periods of time.

The auto industry uses platinum for catalytic converters, which can help reduce the toxicity of gases and pollutants in the exhaust that an internal combustion engine creates. Platinum and other platinum-grade metals in catalytic converters have led to a secondary market for scrap converters, which scrap businesses will buy in order to extract the metal for resale. The metal is also used in thermometers, laboratory equipment, electrodes, and dentistry equipment.

Platinum is one of the most valuable elements in the world, and considered one of the most costly precious metal commodities. However, while platinum traded at a significant premium to gold for decades, it has not since 2008; as a weak global economy put a damper on demand for the precious metal, but investor unease about central bank stimulus and other economic matters sent gold prices higher.1

Since the financial crisis of 2007-2008, platinum has generally performed worse than other metals like gold, silver, and palladium. Market observers believe a crash in platinum markets in 2008 scared the investment class away from the metal, leaving the automobile and jewelry industries as platinum’s only source of demand. In addition, South African mines have substantially increased production of platinum since 2014 and added to global supplies.

Cogent Economics & Finance. "Effects of the 2008 Financial Crisis on the Linkages Among the Oil, Gold, and Platinum Markets." Accessed Jan. 19, 2021.

CME Group. "Platinum." Accessed Mar. 23, 2021.

Japan Exchange Group. "Commodity Futures Quotes." Accessed Mar. 23, 2021.

Royal Society of Chemistry. "Platinum." Accessed Mar. 23, 2021.

Mineral Council South Africa. "Platinum." Accessed Mar. 23, 2021.

U.S. Geological Survey. "Platinum-Group Metals in December 2020," Page 1. Accessed Mar. 23, 2021.

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