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Platinum vs Gold vs Silver as an Investment: Who Will Outperform In Next 5 Years?

Precious metals may well become the investment of choice for numerous investors fatigued by the constant turmoil enveloping the world for the past several years and that still shows no signs of letting up. Platinum vs. gold vs. silver investment, which will outperform in the next 5 years? The answer probably lies in terms of dollars or percentage points. Being the cheapest precious metal, silver will most likely win on the percentage point front. Gold has the highest possibility of winning in dollar terms. Platinum will probably fall somewhere in between.

  • Platinum: This metal is really not considered “hard money” or an exchange medium as gold and silver are, and for a very valid reason.
    Our ancestors did not have the technology required to melt platinum into coins or bars, as platinum melts at above 1,700 degrees Celsius, compared to 1,000 degrees Celsius for gold and silver. Platinum did not even appear on the radar as an investment until the first Platinum ETF was unveiled in 2007. This metal is however renowned for industrial applications, particularly in its use in auto and truck catalytic converters, and its price is directly correlated to economic expansion. In light of today’s uncertain economic outlook, demand for platinum is expected to stay flat; however, supply is still constricted, putting upward pressure on the price.
  • Gold: Gold is the metal of choice for jewelry, as more than 68% of its use goes into jewelry. Regarded as the premier store of value, it is held by central banks around the world. Although gold may encounter some soft spots along the way, it is predicted that gold will outperform any commodity for the next 5 years. Several recent developments in global banking will propel gold into an even more elevated status than it currently holds. Gold is due to be recognized as a Tier 1 asset for central banks at the beginning of 2013 and this event alone will make gold ever more desirable to central banks. Furthermore, China has surpassed India as a major buyer of gold, and China’s seemingly insatiable appetite for gold appears to be growing. Gold stores have sprung up throughout China and Chinese citizens are snapping up gold like cupcakes. SPDR Gold is now among the top 5 holders of gold bullion in the world, as investors flock to the safety of gold as a hedge against turbulent times.
  • Silver: Up until recently, silver was the exchange medium of choice for China and has been so for centuries. Due to its low price, silver can be readily used for commerce, as it is rather difficult to make change for gold. Silver has not only handily outperformed gold, but also all other commodities for the past 10 years in terms or percentage point appreciation. Supply is also predicted to lag demand for the next several years and silver furthermore has the highest industrial application of the three precious metals, at more than 76%, compared to 12% for gold, and 70% for platinum.

Conclusion: Taking all these factors into consideration, the crystal ball consensus predicts that in the next 5 years, gold will lead, followed closely by silver, then platinum.

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