Now that supply of retail products is tightening amid coronavirus contingency measures and lockdowns, investing in physical platinum without taking delivery of investment bars and coins is an accessible and cost-effective way of owning platinum, says the World Platinum Investment Council (WPIC).
The council notes that demand for physical precious metals in the form of smaller bars and coins is currently extremely strong amid growing concerns over the negative economic effects of the Covid-19 pandemic.
At a time when global supply chains are experiencing disruption, retail investors are seeking hard assets, it states.
The current disruptions in this arena include the Royal Canadian Mint’s decision on March 20 to suspend production of minted bullion coins and bars for two weeks, while three precious metal refineries in Switzerland have temporarily suspended production from March 23.
The WPIC points out that investors looking to own physical platinum and wishing to avoid fulfilment constraints - and potentially paying significant premiums above the spot price - can choose to access their investments online.
For example, online bullion accounts enable investors to buy, store and sell physical platinum bullion through a trading platform.
The council explains that investors can trade as little as 1 g at a time, meaning that minimum investments are below $50. Their platinum is fully insured and stored in high-security vaults and some platforms offer investors the choice of taking physical delivery.
Distributed ledger, or blockchain database technology, is also being used to facilitate digitally recorded fractional ownership of precious metals. Accurate, certified ownership of investors’ precious metals is reconciled daily, allowing them to directly own precious metals held in highly secure commercial or sovereign mint vaults.
Another way of investing in physical platinum is through physically-backed exchange traded funds (ETFs).
The WPIC notes that shares in a platinum ETF can be bought and sold through online trading accounts or an online broker, with a minimum investment of just one share; currently one share costs less than $100.
With a physically-backed platinum ETF, investors know that the value of their shares is 100% matched by physical platinum in the form of investment bars.
These platinum bars, also held in a highly secure vault approved by the listing exchange, are the only assets of the fund and reflect the platinum price, less associated fees – which are typically well below 1% a year.
This type of asset allows an individual or asset manager to invest in physical platinum without incurring additional costs, such as insurance premiums and storage.