The Transcendent Status of Platinum
Platinum is a Platinum Group Metal (PMG), alongside rhodium and palladium, known for its beauty, rarity, durability, and versatility. Here's how it's used in this day and age:
- Jewelry: Platinum jewelry is often 90% to 95% pure, which easily outpaces gold, and makes it hypoallergenic or suitable for sensitive skin.
- Automotive: Platinum also plays a role in the manufacturing of catalytic converters, as the metal helps convert carbon monoxide, nitrogen oxides, and hydrocarbons, into less toxic nitrogen, carbon dioxide, and water vapor.
- Watchmaking: In luxury watches, brands like Rolex and Patek Philippe produce limited editions featuring platinum casings because it gives the watches a more substantial feel.
- Medicine: In medicine, platinum’s biocompatibility has it used in pacemakers implantable defibrillators, and more.
Platinum's Limited History as Money
Platinum was not used as a circulating currency until the 19th century, which lasted only a few decades, and only in tsarist Russia. In the late 1980s, some sovereign mints, including the Royal Canadian Mint started minting platinum coins, and the U.S. Mint only followed suit in 1997 with its first platinum coin.
Why is platinum not as suitable as money as gold and silver are? One theory is that due to the few sources of extractable platinum deposits being nearly all located in South Africa, a region that is prone to civil unrest and worker strikes, the supply is simply too volatile to underpin currencies.
The $1 Trillion Platinum Coin Idea
The $1 trillion platinum coin idea has been proposed as a legal loophole to circumvent the U.S. federal debt ceiling. The idea involves the U.S. Treasury minting a platinum coin of arbitrary value, depositing it at the Federal Reserve, and crediting the government’s account with $1 trillion.
The concept hinges on a U.S. law provision granting the Treasury Secretary the authority to mint platinum coins of any denomination. Notably, the Treasury does not have the same discretion with gold and silver denominations.
Platinum as an Investment
Investors who seek stability and diversity in their portfolios often turn to precious metals, including platinum bullion, in the form of bars and coins. As we covered above, unlike gold and silver, platinum does not have a storied history as a monetary metal. However, with its limited supply, industrial demand, and status as a luxury metal, platinum can also be a good hedge against inflation.