Thursday, 16 June 2022

Bought some Platinum

I recently watched a video that pointed out that Platinum was relatively 'cheap' compared to the traditional ratio of platinum to gold spot price (I had, indeed, grown up in a period when platinum was generally as expensive as gold, or even slightly more expensive). The was some discussion regarding why the Platinum price might have dropped relative to gold (such as no longer used as much in catalytic converters, and the relative difficulty/cost of using platinum for working the harder metal for coins, jewellery etc.). But I recall similar conjecture that the price of silver would plummet with the transition from silver-based photographic use to digital photography, and the fact is that platinum was always harder to work into jewellery than the much softer gold, but that didn't affect its pricing.

So, I decided to increase my monthly 'savings plan' contributions into my Perth Mint online depository account by $100 each month, and purchase ~$100 of unallocated Platinum in addition to my existing monthly purchases of ~$100 of gold and ~$100 of silver.

Unfortunately you can only set up an automatic purchase plan for gold and silver. For platinum purchases you have to log in during trading hours and manually place an order. So although my $300 gets automatically deposited around the 15th of each month, and the gold and silver purchases are processed automatically at the close of business on the first business day each month, I'll have to remember to log in around the 16th of each month (as soon as I get confirmation that the $300 has been deposited) and place a manual order.

Aside from inconvenience of having to manually place the platinum order each month, the manual order also charges the standard 1% transaction fee, whereas the automatic purchase plan transactions are charged a reduced 0.5% fee.

Theoretically adding a third 'precious metal' to my bullion investment *should* provide some diversification benefit i.e. reduced volatility in the value of my bullion investment while retaining the overall performance of 'bullion' as an asset class. Whether adding some platinum to my gold and silver holdings affects the performance of my 'bullion' investment positively or negatively in practice will of course depend on the relative performance of the three metals. I think that there is a least a chance that the relative value of platinum to gold will see 'reversion to the mean' in the long term (but that could either mean the platinum price increases, OR that the gold price falls).

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