Even though Platinum can be found in meteorites, it is considered to be one of the rarest metals on earth. Platinum is mined and produced in a quantity of 5 million troy ounces. By comparison, the gold industry mines 85 million troy ounces a year, and silver 547 million. Both of these metals are also considered rare.
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Platinum’s metallic properties contribute to a variety of commercial and industrial industries. The attraction of the metal is in the resistance to high temperatures and it does not oxidize by air exposure. The metal is also useful as it does not react to chemicals and is a wonderful conductor of heat.
AvaTrade offers platinum CFD trading with special benefits:
- Trade platinum and other metals with competitive spreads
- Comfortable leverage of on platinum
- Choose to trade manually, semi or auto trading
- Employ different strategies to maximise your trades
- Trade anywhere with your mobile phone, tablet or web trading
The Platinum Market
Around 50% of platinum consumption, perhaps even a little more, goes to the jewelry industry. However, due to high concentration and its components, only in the last decades people learned how to properly melt and use platinum for jewelry. Platinum is also used as an important and almost irreplaceable component of catalytic converters in fuel engines. Other industries such as medicine use platinum, but in much lower figures. Most of the platinum mined nowadays, a little over 80%, comes from Africa. The majority of the rest is divided between Russia and North America.
The trading of platinum is global, as it is traded from the New York Mercantile Exchange (NYMEX), through the Chicago Board of Trade (eCBOT) and all the way to Asia with the Tokyo Commodity Exchange (TOCOM). The platinum market is open for trading from 22:00 to 20:59 GMT.
Advantages of Trading Platinum
- Platinum is an essential component in catalyst converters, with a major reliance on oil and environmentally safe energy consumption.
- High demand for platinum usage in jewelry. Due to the metals durability and non-reaction when exposed to chemicals, and does not tarnish over time.
- The endless uses for platinum in the use of archival photography, thermometers, electrodes and smaller electronic devices.
- The metal has found its place in the medical arena, where some compounds found in platinum are used in some forms of chemotherapy.
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What Affects the Platinum Price
The special properties of platinum launch this metal into high demand and into diverse industries. With that, these various industries can also have a reduction in the demand of this metal, leaving it exposed, to changes and vulnerable to drops and jumps within the market. The platinum price saw large changes over the years, and there are a few factors that cause changes in its value:
Comparison with Gold
It is not uncommon to compare the price of platinum to the price of gold. When the financial markets are stable platinum is estimated to be worth about twice the price of gold. However, when the price of gold goes up usually the price of platinum goes down. Often the 2 assets have an inverse relationship to each other – when one goes up the other goes down.
Rarity as a Natural Resource
As mentioned before, platinum is a very rare natural resource. As such, its price is affected by the supply and demands; meaning the amount of platinum mined compared to the needs for it in the world.
Due to its uniqueness, most of it goes to specific industries. A change in one of them can create major shifts in the platinum value. For instance – as mentioned before, platinum is used in engines. If, as part of the global trend of green energies, companies will reduce the use of motored engines, the value of platinum can drop.
Platinum CFD Trading
Platinum is not traded for the real physical instrument, but for its contract for difference (CFD). That means one does not purchase or sell the instrument, but he is able to benefit from the fluctuations in the instrument’s price. Although the trader is not trading on the actual instrument, the broker provides him with the real-time pricing and actions from the “real life” value. Trading CFDs, as opposed to direct trading, has a few advantages:
Instruments’ values can change within minutes in some cases. If a person owns platinum when its value is $1,700 and suddenly there is a shift in the market and the value drops to $1,300 he will have lost $400 of its value. This is a declining asset which other people are not interested in buying it. However, if he traded its CFD he can simply close his position at any given time. By trading platinum CFD the trader is able to go both ‘long’ and ‘short’ on the trade.
Another reason is as simple as the price. Platinum is expensive, and in order to purchase one unit the trader will have to pay a substantial sum. Trading platinum CFD, however, the trader can employ leverage of up to , and reduce the capital amount he would need.
When it comes to a rare and special metal such as platinum, even if one would physically buy it he would need to transport it, maintain it, keep it safe etc. CFDs allows traders to trade on them without all these extra costs and hassle.
Platinum Trading With AvaTrade
Platinum is a unique metal to trade, and not suitable for any trader. However, the benefits of trading it can attract many different traders, and it’s important to trade only with a broker that is regulated, with which you know your funds are safe and you can receive fair and good treatment. All those, combined with other features you should look for in a broker,like an easy to use trading platform, are crucial to be able to trade well. AvaTrade offers an array or instruments, platforms and top services, allowing you to excel in your trades.
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