Platinum vs. Silver: Is Platinum or Silver the Better Investment?

When it comes to investing in precious metals, two of the most popular options are platinum and silver. Both have their unique attributes, uses, and market dynamics that can impact their investment potential. In this article, we will explore the key differences between platinum and silver to help you determine which might be the better investment for your portfolio.

Investment Value of Silver

Throughout history, silver has been used as a medium of exchange in various cultures, including the Roman Empire, China, and the Americas. Its malleability and antibacterial properties also made it a sought-after material for jewelry, tableware, and even medicine. Over time, the demand for silver has continued to grow, driven by industrial applications in sectors such as electronics, photography, and healthcare. This industrial demand has further solidified silver's investment value, as it is a versatile metal used in a wide range of modern technologies.

Silver is trading at $31.63 per ounce in October 2024. 

Investment Value of Platinum

Historically, platinum has outperformed other precious metals like gold and silver, making it an attractive option for long-term investors seeking stability and potential growth. One of the key factors driving the historical investment value of platinum is its extensive use in various industries, including automotive, jewelry, and the chemical industry. The demand for platinum continues to be strong, especially in emerging markets where rapid industrialization is driving the need for this precious metal.

Platinum is trading at $999.50 per ounce in October 2024. 

Platinum vs. Silver

Hedge Against Inflation

Both metals are inflation hedges since they’re tangible and have a finite supply. These factors make them more popular during times of high inflation. Their prices can be influenced by factors like supply and demand, geopolitical events, government regulations, new uses and general market conditions.

Silver could be a better option for investors who have more limited budgets since the price per ounce of silver is much lower than platinum. However, the silver market is smaller and more volatile, which can lead to wide price swings. Despite these price swings, silver returned 15% from 1976 to 1978, which were years marked by high inflation.

Platinum is much rarer than silver. It’s 30 times rare than gold and has wider applications, including medical devices, medications, catalytic converters and electronics. It returned 45% from 1976 to 1978. Platinum could be a better option for investors who have larger funds to invest and want more stability.

Jewellery Manufacturing

One of the main differences between platinum and silver is their durability. Platinum is a much harder and denser metal compared to silver, making it more resistant to scratches and everyday wear. This makes platinum jewelry ideal for pieces that are worn regularly and subjected to daily activities. Silver, while beautiful and malleable, is softer and more prone to scratches and dents, requiring more maintenance to keep its appearance.

In terms of value and investment, platinum tends to hold its value better over time compared to silver. With its rarity and high purity, platinum jewelry can be a long-term investment that retains its worth. Silver, on the other hand, may fluctuate in value depending on market conditions and is generally considered a more affordable option for those looking to add variety to their jewelry collection.

Future Outlook

So what is the future outlook like for platinum vs. silver? Both have positive futures, especially with new government regulations. For example, President Biden passed the Inflation Reduction Act, the largest-ever federal investment in renewable energy. This act will increase the demand for platinum and silver since they’re both found in catalytic converters and solar panels.

Like platinum, silver is experiencing shortages, which could increase its value. Per Nicky Shiels, head of metals strategy at precious metals company MKS PAMP, “Silver is in a shortage…and there is a notable drawdown in the available physical stock held in New York and London’s physical hubs, more so than seen in gold.”

Shiels mentioned that a silver deficit of over 100 million ounces could occur over the next five years, leading to higher prices.

Best Alternative Precious Metal Investments

Besides platinum and silver, other precious metals alternatives are available. For starters, gold is the most famous precious metal and has been used throughout history to hedge against economic uncertainty and inflation. It has many uses, including dental fillings, semiconductors, mobile phones and other types of electronics.

One of the easiest ways to start investing in gold is via gold coins or exchange-traded funds (ETFs). Gold ETFs can be traded with any online brokerage, often commission-free. Some gold ETFs track the spot price of gold, while others hold gold mining companies like Barrick Gold Corp. (NYSE: GOLD).

American Gold Eagle Coins

Palladium is another precious metal that is similar to platinum. It’s rarer than gold and is used in catalytic converters, electronics and jewelry. It’s trading at $1,001 per ounce in October 2024.

Best Platforms that Sell Platinum and Silver

Some of the best precious metals brokers are Advantage Gold and American Hartford Gold. They are BBB accredited, have many positive customer reviews and have helped many thousands of average investors successfully invest in precious metals.

They pride themselves on simple processes like making it easy to trade precious metals via their help desks. They staff their help desks with knowledgeable traders who can walk you through the process from A-Z. They provide benefits like transit insurance and free IRA rollovers for new clients.

These partners offer free educational content like blogs and videos to keep you up to date with precious metals investing hacks.

How to Buy Platinum and Silver in a Precious Metals IRA

Another key value-add that these partners offer is that they’re all qualified to be precious metals IRA custodians. You can use self-directed IRAs to invest in precious metals on a tax-deferred or tax-free basis.

By IRS requirements, you must have a third-party custodian hold your precious metals that are held in an IRA. Precious metals IRA custodians can help you stay up to date with important paperwork, including reporting capital gains to the IRS. The partners mentioned above can show you which specific coins and bars are IRS-approved for your self-directed IRA.

Is Platinum or Silver the Better Investment?

So, is it better to invest in platinum or silver? Platinum is a higher-value metal that is rarer and has a wider range of industrial uses. It has seen typically greater returns than silver, and prices could go higher because of steep shortages.

Silver, on the other hand, is more volatile, which could result in buying it at a discount. You can take advantage of larger price swings if you’re a short-term trader. Silver is projected to increase in value over the next few years because of the Inflation Reduction Act, shortages and its many industrial uses.

The bottom line, both metals can be suitable during times of high inflation, but it really boils down to your risk tolerance, goals and market conditions.

Frequently Asked Questions