Price fluctuations and production surges of precious metals have largely been determined by how investors cling to their investments.

Such is the case in gold. The precious metal was practically unknown as an investment vehicle from the 1800 to 1933, selling only at $20 per ounce flat during those times. It was only during the 1970s onwards when gold became big time and gave one of its shiniest performances.

The same could occur with platinum, gold's alter ego since the white metal trades more appealingly compared to the shining silver.

Gold spot prices as of Oct. 27 hovered at $1,747 per ounce. Platinum, on the other hand, sold for about $1,636 an ounce.

For investors, this meant only 0.93 ounces of gold is needed to buy an ounce of platinum. For traders, one ounce of gold stands for 1.07 ounces of platinum.

Platinum Sets its Hedge

So why not invest for a pair trade by going long for platinum and short for gold?

Today, gold may be more expensive than platinum. But platinum is a far rarer metal than gold, and unlike the latter, platinum has extensive industrial use in addition to its use in jewelry.

In terms of "premium," platinum will always value more over gold because it is 30 times rarer than the yellow metal. Plus, annual platinum production is a tiny sliver compared with gold output.

Gold Sets the Pace

For now, gold will remain a highly sought after physical asset. According to the World Gold Council, the greatest demand for gold comes from jewelry makers at 57 per cent of the total global market. Gold for investment purposes represents 31 per cent, while 11 per cent is for industrial purposes.

But platinum has traded about 64 per cent above gold on average in the past decade. The yellow metal fared lower than platinum since 2008.

It was in December 2008 when gold soared as a safe haven with weak auto sales burrowing demand for platinum. That time, platinum retook gold just a few days later and went on to post a powerful 130 per cent plus gain in the next two years.

Analysts have long recommended that a well-rounded portfolio should have not only gold and silver, but platinum as well.

Conservative investors have been advised to allocate 7 per cent of their investments in precious metals while the more aggressive ones may allocate 16 per cent to increase expected returns and reduce portfolio risk.

Precious metals currently account 1 per cent of investment allocation for the average portfolio.