An alternative way of gaining access to the platinum market for investors who are familiar with the equity market is by buying stocks 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 platinum stock price in the short term.
An important detail to take note of when investing in platinum 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 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
How to Start Trading Platinum Mining Stocks
To buy or sell platinum mining stocks, you need to open a trading account with an online stock brokerage such as TD Ameritrade. We recommend TD Ameritrade as they provide a virtual trading platform where beginners can try out stock trading in real market conditions without using real money.