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Platinum Mining Stocks

An alternative way of gaining access to the platinum market for investors who are familiar with the equity market is by owning shares of platinum producing companies.

The price of the platinum stock generally correlates with the platinum spot price but other factors like management's competence, future growth prospects and operating capabilities can also positively or negatively impact the share price. Rare but probable events such as strikes by the mine workers can also severely affect the stock price in the short term.

An important detail to take note of when investing in platinum mining stocks is how much of the company's future production has been hedged. A platinum producer with a substantial proportion of future production hedged will not benefit as much as an unhedged producer if platinum price rise signifcantly. Conversely, should the price of platinum fall dramatically, the unhedged producer will suffer a greater drop in earnings (and possibly even losses) when compared to the company whose production is substantially hedged. While unhedged platinum stocks offers greater leverage, hedged platinum producers offers more stability.

Unlike owning physical platinum, ownership of platinum mining stocks also let the investor earn a dividend, in addition to capital gain. Furthermore, as platinum price goes up or as the company expands (or both!) and profits grow, the dividend payout will also rise.

Major Platinum Mining Companies