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

Markets are volatile in February 2023 and inflation is climbing, which is why more investors are considering investing in precious metals like gold, silver, platinum or palladium. Two of the more popular and useful precious metals are platinum and silver. Both are used in catalytic converters and general electronics and play a strong role in sustainable initiatives.

While these metals are inflation hedges and can appear physically similar, they have key differences. For starters, platinum is much rarer and has a higher melting point than silver. Platinum trades at $1,013 per ounce vs. silver at $23.61 per ounce in early 2023.

So is it better to invest in platinum or silver? Keep reading to learn more, including the future outlook, the utility of each metal and how to set up a precious metals IRA.

Platinum vs. Silver: Utility

Platinum and silver are both used in catalytic converters found in cars, electrical equipment, jewelry and dental fillings. They’re both used in batteries since they’re good conductors of electricity.

Platinum is a denser, heavier metal with a higher melting point than silver. These characteristics make it more resistant to corrosion and chemical reactions. Platinum is less susceptible to toxicity compared to silver. 

Because of these properties, platinum has more uses in medicine. For example, platinum is needed in medical devices like pacemakers, catheters and stents. It’s found in anticancer drugs such as cisplatin, carboplatin and oxaliplatin.

Silver is a softer metal with a lower melting point, making it more suitable for jewelry. Compared to platinum, it has a greater ability to reflect light, which is why it’s more commonly found in silverware and mirrors.

Platinum vs. Silver: Which is the Best 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 more 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 greater funds to invest and want more stability.

Platinum vs. Silver: 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.

Platinum had its best quarter since 2008 in Q4 2022. A major reason behind its rise is a projected shortage in 2023, with demand growing by 19% and supply increasing by 2%. 

Platinum may see higher demand for its uses in healthcare and jewelry. China recently bought a record amount of platinum. Platinum gained more than 13% in 2022, beating gold, silver and palladium.

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.

Platinum vs. Silver: 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 coins like the American Gold Eagle coin are found with partners like Red Rock Secured. 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 $1,566 per ounce on Feb. 2, 2023. You can buy 1-ounce palladium bars via Red Rock Secured.

Best Platforms That Sell Platinum and Silver

Some of the best precious metals brokers include Birch Gold Group, Red Rock Secured, Advantage Gold and American Hartford Gold. They are all 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. You can gain insider information on IRS loopholes while investing in precious metals with this free eBook.

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. Each of 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.

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.

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