Platinum is a rare metal found in Zimbabwe, the United States, Russia, Canada, and South Africa, which has up to 75% of the world’s platinum reserve. It is an industrial metal used to manufacture jewelry, cars, and roofing materials. It is also a versatile industrial material that is used across different industries such as construction, automobile, and medicine.
Platinum stock is an investment option for many, as it is considered a safe investment because it is an excellent way of diversifying your investment portfolio. You can also use platinum stocks as a hedge against inflation. The Platinum stock symbols vary in stock markets that trade in platinum stocks. In the London Stock Exchange, platinum is traded as ETF with LSE: PHPT as the stock symbol. In the New York Stock Exchange, PPLT is used as the platinum stock symbol. It is important to know the platinum stock symbol in the stock market you want to buy from, for easy identification.
Platinum stocks are traded globally, and like other stocks, its price is affected by different events. Majorly, it is the demand and supply in the various industries that platinum is used that determines the price of platinum stocks. Therefore, it can be said that platinum stock is also open to vulnerability and changes in stock market prices. Other factors that determine the stock market prices of platinum include its rarity and industrial demand. When it comes to comparison with gold, the usual trend is that when the financial markets are stable, the platinum stock price shoots up two times that of gold. However, it is the other way around when the stock price of gold goes up, as the stock price of platinum drops.
The outbreak of the deadly Coronavirus had adverse effects on virtually every aspect of human existence, platinum stocks inclusive. In January 2020, platinum stock was on a bullish run but was halted by Covid-19. Platinum price, demand, and supply were all negatively affected by the pandemic. Still, experts say platinum did better than predicted, based on the Q1 2020 results as contained in the reports of the World Platinum Investments Council (WPIC). The lockdown in South Africa, which is the largest producer of platinum, further affected the market value of platinum stocks worldwide. However, there has been a renewal of interest in platinum from investors and an increase in Platinum ETF buying. It has been predicted that this will give platinum stocks a boost amidst the global health crisis.
After the slump in platinum prices in Q1of 2020, platinum stocks appear to have recovered a bit and have maintained a steady market position. However, this could be affected if there is a second wave of Coronavirus as is being predicted. Like any other stock, taking a position on platinum stock may be risky as there is no guarantee that it will continue its bullish rise. If you are a short term investor, it is not advisable to put all your cash into platinum stocks. Going by the current trends, platinum stocks will only favor long term investors.
Understanding How Platinum Stocks Work
There are several options you can go for when investing in platinum stocks. You can purchase platinum future contracts, platinum coins, or bars. You can also go for the conventional buying of shares of platinum mining companies.
Another platinum investment option is the Platinum Exchange Traded Fund (ETF). Like other industries, there is the Platinum miners ETF where you can combine platinum mining stocks with that of other sectors. Platinum ETF is a preferred option if you don’t want to buy shares directly from platinum companies. With Platinum ETF, you have a broader exposure to the platinum market in a single purchase. Some of the Platinum ETFs you can consider during your research to purchase platinum ETF include GraniteShares Platinum Trust ETF (PLTM), Aberdeen Platinum Physical Shares ETF(PPLT), and Sprott Physical Platinum and Palladium Trust.
You can also choose to go for platinum penny stocks. As you know, penny stocks are company stocks that trade for less than $1. This allows you to accumulate thousands of shares at a lower price to sell for more when the market price of the stock shoots up. It is, however, considered a high-risk investment because of the speculative nature of the stock prices. Also, the shares are illiquid with limited disclosure and big spreads. If you decide to lean towards platinum penny stock, it is advisable to do extensive research about the platinum companies that offer the penny stocks. This will allow you to go for the most reliable one, albeit without changing the fact that penny stocks are high-risk investments.
If you are skeptical about making a long term investment in platinum due to the market volatility, which is quite understandable, you can trade in platinum Contracts For Differences (CFD). Platinum CFD trading affords you the opportunity to trade a long term position by speculating that the platinum stocks will rise or trade short term by speculating that platinum stocks will fall. This places you in a position to generate profits on either side of the market trend.
Top Platinum Companies You Should Consider
There are different platinum mining companies you can invest in by buying their platinum stock. If you need to diversify your investment portfolio, trading in platinum stock is a smart way of balancing your portfolio due to the variance of metal and other equity asset classes. To identify a platinum mining company, you must do your research and ensure that the company you choose is in the business of exploring, developing, and mining platinum. Companies that also purify and process platinum to make other end products such as jewelry also trade in platinum stocks. Here are some of the performing platinum stocks in 2020:
1. A-Mark Precious Metals Inc. (AMRK)
ARMK is a precious metal trading firm that has quite a reputation in dealing with precious metals worldwide. It is ranked the best performing platinum stocks in 2020. Its precious metals stocks have changed by an impressive 297.2%.
The percentage change is calculated using the previous year’s (2019) closing price, which was $8.27 per share, and the year to date (2020) closing price of $31.36 per share as of November 2020.
AMRK’s market value has grown from $58.15 million to $222.35 million in 2020. Apart from platinum, AMRK also trades in Silver, Basic Industries, Speciality Stores, and Palladium.
There are ETF companies that hold AMRK precious metals stocks in their portfolio. Some of these companies include iShares Core S&P Total U.S with a total of 3,090 holdings at a quarterly frequency of dividend sharing, Vanguard Total with an expanse ratio of 0.04%. Others include iShares Microcap and Vanguard Extended Market.
2. ASA Gold and Precious Metals (ASA)
ASA is an investment management company. They are a non-diversified, close-ended funding company that invests in companies that engage in the exploration, mining, or processing of platinum, gold, and silver.
ASA invests at least 80% of its assets in common shares, bullions, instruments representing interests in precious metals, and securities of investment of ETF companies of mining companies.
This California based company’s platinum stock as at the end of 2019 was valued at $13.63 per share and as of November 2020, has increased to the tune of $20.4 per share.
The 49.67% change placed the company as one of the highest-ranking platinum stocks for the year 2020. The market capitalization of ASA Gold in 2019 was $262.92 million as against $393.51million in 2020.
3. Franco-Nevada Corporation (FNV)
FNV is a multinational company with a presence in Africa, North-America, and Australia. Its major business is the trading of gold, but the company still trades in platinum and silver, and it has one of the highest-ranking platinum stocks.
FNV recorded its highest stock closing price at $163.40 in July 2020. It has an average stock price of $129.41 in the last 52 weeks. In Q1 of 2020, FNV recorded a revenue of $240.5 million, which is a 34% increase from that of Q4 2019.
The company achieved a 29.94% change in the value of its stock between 2019 and 2020. The value of its stock as of the end of 2019 was $103.3 per share and is currently trading for $ $134.23 per share. Its market capitalization also grew from $19.47 billion in 2019 to $25.55 billion in 2020. Direxion Daily Gold Miners holds Franco Nevada stocks in their portfolio with a quarterly frequency of dividend sharing.
4. Sibanye Gold Ltd. (SGL)
SGL is a platinum mining company based in South Africa. It is classified under Basic Industry but trades in precious metals.
In Q1 2020, SGL recorded a revenue of $990 million as against $142 million in Q1 2019. Its stock value has grown from $9.93 per share to $12.26 in 2020, representing a 23.46% change in stock value. It also recorded a market capitalization growth from $6.53 billion in 2019 to $7.89 billion in 2020.
Avantis Emerging Market Equity (AVEM), an ETF company, holds the stock of SGL. AVEM boasts of 1505 holdings with an expense ratio of 0.33%,
5. Platinum Group Metals Ltd. (PLG)
PLG is a precious metal company that deals in the exploration, acquisition, and development of palladium, platinum, gold, rhodium, and copper. In October, PLG closed a non-brokered private placement with Hosken Consolidated Investments Limited (“HCI”) at a price of $2.18 per share and made a profit of $2.5 million.
It was recently added to the S&P/TSX SmallCap Index. As of November 2020, PLG has sold 4,617,177 common shares at an average price of $2.16 per share and making a gross profit of $10.0 million.
In 2019, the company’s stock value was $1.69 per share and has grown to $2.01 per share in 2020. The 18.93% change in the value of stocks ranks it among the highest performing platinum stocks of 2020. Its market capitalization grew from $103.92 million in 2019 to $134.25 million in 2020.
When mulling over the platinum stock to go for, the best thing to do is to do extensive research on the stocks before buying. However, nothing is guaranteed, especially with the threat of a second wave of Coronavirus. Any situation that will lead to platinum miners halting exploration may drastically affect market prices, and you should carefully follow the trend before making any commitment.
If you find yourself dithering on whether to commit to a short term or long term investment, a viable option you can go for is the platinum CFD, which guarantees you profit no matter where the market wind blows.