Almost everyone has at least some basic concept of trading stocks, and most have heard about fluctuating gold prices, but many have not considered purchasing platinum. Yet, investing in a platinum ETF can be a smart move. ETF stands for “exchange-traded fund”, which basically just means that it can be traded the same way as stocks. In fact, trading in platinum is sometimes called “buying shares in the platinum price” to reflect that it is bought and sold in shares very much like stocks.
Platinum EFTs are valued in a similar fashion to mutual funds. However, while a mutual fund is valued according to what stocks it holds at the end of the day, Platinum EFTs are valued at the current price of platinum, which may fluctuate throughout the day. Also, unlike a mutual fund which can only be traded at the end of the day, platinum EFTs can be traded at any time during the day.
Investing in a platinum EFT is beneficial over purchasing actual platinum for several reasons. For one thing, the cost of transporting and storing bars of platinum makes the whole endeavor much more complicated and expensive. Unlike holding actual platinum, platinum EFTs work like stocks that can be sold and exchanged, and there is no minimum investment. Platinum EFTs are also considered to be a tax-friendly investment.
Investing in platinum EFTs is easy. If you already have a brokerage account, all you have to do is search for platinum EFTs and invest through that account. It may prove to be a smart investment down the road, as platinum prices are tied to the jewelry industry (which is enjoying increased demand in China) and the automotive industry (which is expected to regain its strength). While the current price of platinum is considered to be fairly low, analysts have predicted that the price of platinum is due to rise in 2012, so investing now may be a very smart move.
