The ownership of a physical form of precious metal such as platinum and gold will provide an investor with a one to one correlation with commodity price movements. However, owning the commodity in this form presents challenges in terms of storage and liquidity. Platinum mining stocks are a more feasible alternative for some investors and they can be quite a worthwhile investment.
An individual who is interested in investing in platinum stocks should assess several factors prior to making an investment. The company should have a record of consistent profitability, a low beta, low debt ratios, and a low price-to-earnings ratio. The production costs per ounce should be low because this will allow the company to weather platinum market downturns.
The precious metals industry tends to attract fraudulent enterprises so an investor should thoroughly investigate any new mining company that claims to have hit the big one. Mines that have a good production history are much safer bets, especially in an unstable economy. That is not to say that there are not any legitimate new mining companies out there, but buyer beware.
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