Understanding the Platinum to Gold Ratio: What It Means for Investors

 

The gold to silver ratio is often used to determine the state of precious metals. If the ratio is high, meaning gold is more valuable than silver, it usually means precious metals prices are low. If silver gains, it usually means there’s a bull market. However, there's another ratio that’s just as important in the world of precious metals: the platinum to gold ratio. If they’re deciding whether it’s smarter to invest in platinum or buy gold, San Diego residents should keep reading to learn how to use this market measure to guide their decisions.

How Valuable Is Platinum Compared to Gold?

Essentially, the gold to platinum ratio is a comparison of spot prices for each precious metal. Currently, platinum is selling for about 80 percent of what gold is selling for, meaning gold is more expensive than platinum right now. In general, platinum is rarer than gold, although this factor alone doesn’t influence the ratio or prices.

What Happens when Platinum Is Cheaper?

In this instance, investors tend to swap their gold for platinum. This doesn’t mean gold takes a nosedive. It’s just a natural tendency to prefer the lower price over one that’s higher. Platinum is now at a multiyear low, and it hasn’t been this low in price since 1982, making it a smart investment choice.

What Happens to Gold Investments if Platinum Is Cheaper?

You don’t necessarily have to give up your gold investments just to take advantage of platinum. Gold has unique qualities that make it the most popular choice for precious metals investors. However, if you have extra gold in your investment portfolio or in storage, you can make a nice profit if you sell some of your gold and invest in platinum. With the current spot prices for platinum being cheaper than gold, you can trade 10 ounces of gold for 12 ounces of platinum. In this example, you would make a nice profit of just over $800.

Why Should You Keep an Eye on Spot Prices?

If you’re smart with your buying and selling, you could earn a nice profit over time with these two metals. Consider working with an investment professional who’s familiar with precious metals if you have concerns about when to sell, buy, or keep what you already have.

What if Prices Fluctuate?

Keep in mind precious metals prices can vary. It’s not unusual for the ratio to change from time to time, as is the case with the gold to silver ratio. The good thing about the gold to platinum ratio right now is that it’s been consistent for several decades, with platinum regularly coming in as the cheaper investment option. Even with economic factors changing over the years, this ratio has remained fairly consistent, which is one of the perks of investing in precious metals. Even so, it’s important to be aware of buying and selling trends to determine what’s right for your investment needs and goals.

 

When they’re looking for the best place to purchase platinum, sell gold, or buy silver bars, San Diego collectors call on the professionals at First National Bullion. We buy and sell all kinds of precious metals, including silver, platinum, and gold. If you’re looking for trustworthy dealers and high-quality service, give us a call today to speak with one of our precious metals experts. 

 

The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.