Category: Forex Trading

Environmental sustainability laws also contribute to price movements in platinum. With more countries and states pushing for green laws, this trend can make platinum a safer choice than gold. Platinum also has potential medical applications; it’s being studied as a possible treatment for Alzheimer’s disease due to its ability to reduce inflammation in the brain. Platinum-based catalytic converters are also commonly found under car hoods. They help reduce harmful emissions released into the atmosphere by burning fuel more efficiently than traditional models while still providing adequate performance levels at all times.

Platinum Price vs Gold Price

Gold has been a popular choice among investors for centuries due to its historical track record of appreciation in value over time, regardless of the state of the stock market. Currently, gold is trading at around $1,744 per ounce, while platinum is trading at around $902 per ounce. Keep reading to learn more about how platinum compares to gold as a long-term investment vehicle.

Moreover, storage costs and insurance are only 1% annually, and you can sell your platinum back to GoldRepublic at any time, ensuring your investment remains highly liquid. Gold which is costly gold or platinum is considered a safe-haven asset that can hedge against inflation and economic uncertainty. It can also diversify a portfolio beyond stocks and bonds, and is considered a "store of value" since its value tends to remain stable over time.

Start Investing In Gold & Platinum Today

An investor’s choice between the two should be informed by their risk tolerance, investment horizon, and overall market outlook. One of the most recent examples of how an economic crisis influences the precious metals market is the COVID-19 pandemic. While the globe shut down many non-essential businesses and many people received government funds to keep them afloat, gold and silver prices skyrocketed. During geopolitical tension, such as when the South African miners went on strike in 1946 or when the threat of war looms, precious metals tend to increase prices. Platinum can be more valuable than gold due to its intrinsic value in the motor industry, which creates a more stable demand for it.

Is Platinum More Expensive Than Gold in 2025?

It’s a safe haven asset that protects against economic uncertainty or inflationary pressures. Where platinum was once more expensive than gold, the situation has reversed in recent years. According to recent data, the gold/platinum ratio currently stands at 2.61 (Monday, August 19, 2024), meaning that gold is now more than two and a half times more expensive than platinum. This is a remarkable shift, especially considering that platinum was once consistently priced higher.

1. Another reason platinum is more costly than gold is that platinum is a considerably rarer metal.
2. This signifies that impurities are virtually absent, and you are looking at a pure metal.
3. During times of economic crisis, when inflation hits, and the dollar’s value begins to decrease, investors tend to hold onto physical assets as their value either remains the same or increases.
4. Platinum is harder to mine than gold, and tends to be heavier and denser.
5. As you can see, the question of whether platinum is better than gold is a subjective one based on your portfolio, your asset allocation, and the current state of the market.

Our free gold buyers guide is an extensive guide that enables you to make your purchase. Called the “Ultrahuman Rare,” the series offers two smart rings coated in 18K gold, sourced from London Bullion Market Association-approved refineries and hallmarked by the Bureau of Indian Standards. A third luxury smart ring model features a silver color band made of pt950 (95%) platinum.

Investors can choose from many precious metals, including gold and platinum. Gold has been a traditional safe haven asset and is arguably the most famous precious metal. Platinum is 30 times rarer than gold and has more industrial uses, especially when it comes to the auto industry and healthcare. Platinum has more severe shortages than gold, which can drive up its price.

1. In 2008, platinum dramatically peaked and dropped in value while gold continued to climb gradually.
2. Platinum is also becoming increasingly popular due to its bright white color that doesn’t fade over time.
3. With more countries and states pushing for green laws, this trend can make platinum a safer choice than gold.
4. Precious metals have been used as currency for centuries, making them one of the most reliable investment forms.

When the two are combined, they create stunning pieces that are also long-lasting. Whether you choose diamond or platinum, it will be the best option for your needs. Mining specialists predict that man has extracted only over 10,000 tonnes of platinum and that total mine production of platinum globally in 2021 will be around 180 metric tons. Ultrahuman’s “Rare” rings will be priced between £1,500 ($1,873) and £1,800 ($2,247), making them equivalent to buying a premium foldable phone.

Here at SD Bullion, we have covered Platinum fundamental investment factors as well as information about supply-demand factors at play today. In other words, in over 115 years, we have not seen platinum values slump this far versus the price of gold. Platinum and diamond are both timeless jewels well-known for their distinct beauty. They are both employed in creating some of the most beautiful rings available today.

For investors, this may present an interesting opportunity to capitalize on the potentially recovering demand for platinum as the global economy continues to develop. By investing in physical platinum through GoldRepublic, you can take advantage of the potential upward movement of this rare precious metal. In conclusion, both platinum and gold are precious metals with unique characteristics that influence their value, demand, and application. If you’ve followed the live spot prices of gold and platinum, you know that gold is typically priced higher than platinum. There are numerous factors that cause investors to sell or buy precious metals, including geopolitical events, economic data, and new technology.

As such, keeping a keen eye on these factors can provide valuable insights into future price movements of these precious metals. Gold and platinum are precious metals with a wide variety of uses, and each has its pros and cons as an investment option. Investors have plenty of options when it comes to where to put their money, from stocks to bonds to ETFs to commodities, like gold. But one investment option that might not be on your radar is platinum — a precious metal that has a variety of uses. Considering all of these factors, it’s essential to consider what you, as a buyer, are willing to risk when purchasing either precious metal. Platinum may have a better resale value in the future, but gold is a tried-and-true investment that people have relied on for thousands of years.

Once a company has crossed the lowest institutional market cap and/or share price thresholds, institutions start to notice. If one likes what it sees about the company, it starts taking a position and often continues to buy in numbers that typically force the share price up. Meanwhile, other institutions take notice, and when the company breaches their market cap and/or share price thresholds, they start to buy, pushing up the share price even higher. And on it goes, with the share price and price per earnings increases driving multiple expansion. First, and most obvious—a small valuation increases the likelihood of multiple expansion. If, for example, a stock is trading at 5 times earnings, there is a much higher chance it will forex white label solution providers for 2023 experience multiple expansion than a stock trading at 50 times earnings.

Why is understanding the impact of Multiples important?

Now look at the P/E 32.5x which can be caused by the market placing a higher value on the future earnings of this business. This Multiple Expansion contributes significantly to the returns the investor receives. While the Multiple Expansion may be a Speculative return, it still matters. However, when the P/E expands without any clear reasoning, it may expose the investor to risk. If investors lose faith in the company, it can compress the P/E multiple. Multiples can be seen as a “speculative return” because they are based on the value placed on a stock by the market.

We can see how the changes in the Multiple can produce entirely different returns based on what value the market places on those earnings. After calculating PIK Interest Expense, you may have realized we’re not properly accounting for it in the Debt Schedule. In the ending debt balance formula for the notes, add the corresponding PIK Interest Expense each year. For the first 3 years, the Subordinated Notes Ending Debt Balance should be increasing.

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• Private equity firms often find themselves competing with strategic buyers, who may be willing to pay a premium for synergies or strategic fit.
• Mandatory amortization consists of regular scheduled principal payments.
• In this example, yield, growth, and multiple expansion enhanced Andrew’s investment returns.
• The move from 24x to 39x earnings explains almost half of Costco’s returns over the past 10 years.
• As you can see, Multiple Expansion is a very powerful force on share prices.
• Proxies should also be easy to update and not require significant “massaging” every quarter to make them meaningful.

You’re used to thinking about equity as one or two uniform tranches. But the equity split between the sponsor and the management team can be nuanced and is an important negotiation point. Go back through our intermediate LBO template and see how much multiple expansion affects projected returns. Authors for themomentumletter.com are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer.

Statement of Cash Flows

If the unlevered return is high, you don’t need a genius capital structure to achieve great equity returns. While not as crucial as revenue and earnings growth, looking at ideas and forecasts on british pound ignored and underappreciated sectors is also a smart move. The saying goes that the leaders of the last bull market are not the leaders of the next one—and there are many signs pointing to this being the case.

What is Multiple Expansion and Its Effect on Returns

Now, we’ll add Net Interest Expense to the Income Statement, and we’re going to include CIRC protection. This is redundant, because we already included a CIRC statement in our debt balance / Interest Expense calculation, but redundancy is better than debugging a broken model. We include the Undrawn Revolver as a debt balance, because the company must pay a small amount of interest expense for the unused commitment. Mandatory AmortizationWe’ve already included the amortization schedule for you, but generally, term loans are the only debt instruments with mandatory amortization. Mandatory amortization consists of regular scheduled principal payments. Senior notes and bonds pay interest every year, but principal is only repaid at maturity.

Unlike market-driven expansion, operational improvement is within the control of the private equity firm, making it a more reliable strategy for achieving multiple expansion. The key is to identify areas where the company can achieve substantial gains and to execute a well-thought-out plan to realize these improvements. Market-driven expansion relies heavily on external factors such as economic conditions, industry trends, and investor sentiment. When the broader market is performing well, valuations across sectors tend to rise, leading to higher multiples. For instance, during a bull market, the increased availability of capital and heightened investor confidence can drive up the prices of assets. Private equity firms can capitalize on this by timing their exits to coincide with favorable market conditions.

Sponsor Returns

• Some value creation models give GPs little or no credit for Multiple Expansion, which is considered to be a product of market timing or “luck”.
• Private equity firms often seek to enhance the value of their investments through multiple expansion, a strategy that can significantly boost returns.
• Let’s say investor interest starts driving the share price up, and, even lacking any noteworthy news or developments, the stock rises to $25 and pushes the price/earnings ratio up to 25/1.
• Every LBO model should include basic credit metrics, because these metrics and the credit profile will inform debt investors’ appetite to fund the transaction.
• We’re going to use an “if” statement to manage circular references.

In LBOs, the sponsor generally buys a controlling stake in the company. Over the course of a deal, you’ll be asked to evaluate many different scenarios and potential outcomes. This article lays out a simple what is blockchain technology how does it work example of adding cases to your model.

By subscribing you agree Wellhub may use the information to contact you regarding relevant products and services. When your company is going through either a merger or an acquisition, there are a few factors to focus on that will determine the overall success of the endeavor. Business is inherently risky, so many organizations involved with M&A wisely follow the old adage of "Don't put all your eggs into one basket."

Why Global Expansion

By diversifying revenue streams and customer segments, a company can spread its risk. This means that if one area is adversely affected, other segments can support the company’s overall financial health. Mergers and acquisitions offer the opportunity for companies to strengthen their market position.

1. If you’re thinking of following the same course of action, make sure to grab our free resource.
2. By eliminating competitors, gaining access to new technologies, and achieving synergies, M&A can significantly enhance a company’s competitive advantage.
3. A great market share is good for a business, but it can be bad for consumers.
4. If economic conditions impact one industry negatively, the diversified portfolio allows the company to rely on the performance of other industries.

Lost Opportunities

1. Merging with or buying an existing and established business in a market the company wants to reach can be much quicker and cheaper than starting from scratch.
2. Furthermore, a culturally diverse workforce can enhance an organization's ability to navigate and thrive in global markets.
3. For instance, a company that has great engineering but poor marketing can successfully merge with another larger business that has great marketing capabilities and, probably, larger marketing budget.
4. Moreover, M&A can facilitate diversification and risk management by entering new markets or expanding product portfolios.
5. Economies of scale refer to the cost advantages that arise when the scale of production, operation, or distribution increases.

These deals span industries such as healthcare, technology, financial services, food, and retail. Despite the complexity and challenges inherent in the M&A process, companies continue to invest significant financial resources in them. Synergies and efficiency play a significant role in the benefits of mergers and acquisitions.

Sometimes it’s difficult to see which companies will thrive and which will fail in the future. Some of the biggest deals of all time were carried out because it was obvious what the future held. Despite the challenges of today’s landscape, growth remains the number one priority for CEOs in 2021.

Its open architecture seamlessly integrates with ERP systems, CRM tools, and other business software, centralising data and automating workflows to improve efficiency and minimise manual integration efforts. Another benefit of an M&A is the ability to offset the acquired company’s losses against the acquirer's taxable income, lowering the overall tax burden. This "tax shield" approach allows businesses to turn the target's losses into financial advantage. In this blog, we'll explore how M&As offer strategic, financial, and competitive advantages, and dive into the key benefits that benefits of mergers and acquisitions make them so attractive. Business is survival of the fittest and tough market conditions can bring even the biggest organizations down.

Mergers and acquisitions (M&A) refer to the consolidation of companies through various financial transactions. The exact mechanics differ, but both involve combining the resources, operations, and market presence of two or more companies. In addition to the challenges and benefits of international M&A, there are also several trends that are shaping the landscape of international M&A. These include the rise of emerging markets, the increasing importance of technology and intellectual property, and the growing focus on sustainable and socially responsible investing. Mergers and acquisitions refer to the joining of two or more companies into a single entity or the purchase of one company by another.

While the total customer base may not be the simple sum of both, as some customers may shift to competitors, a well-planned M&A strategy can effectively minimise these losses. M&A facilitates internal and external growth, offering diversification, expanded distribution capacities, greater brand recognition, and potential tax benefits in new markets. Among the most important benefits of mergers and acquisitions is the ability to expand internally and externally. Merging with or buying an existing and established business in a market the company wants to reach can be much quicker and cheaper than starting from scratch.

A successful M&A also delivers much needed cultural diversity that can benefit your company in the long-term. But perhaps one of the most lasting benefits is the potential for integrating already diverse teams and drawing on a wider pool of global talent. By adopting these strategies, companies can navigate the challenges of M&A more effectively and increase the likelihood of successful integration and value creation.

Even despite the record-breaking 2021, the global M&A deal volume reached $3.8 trillion in 2022 and $1.3 trillion in the first half of 2023. A merger describes a scenario where two companies unite, and one of the companies ceases to exist after becoming absorbed by the other. The boards of directors of both companies must first secure approval from their respective shareholder bases. Although no one could have predicted the scale of success that would follow, Marvel had just released Iron Man in 2008 which made half a billion dollars at the box office. Secondly, M&A enables access to new technologies, skills, and expertise, fostering innovation and enhancing competitive advantage. Additionally, pooling research and development efforts can lead to innovative solutions and accelerated time-to-market.

Why Companies Merge

The talent war is a significant challenge for many companies, particularly in industries where specialized skills are in high demand. One of the major benefits of mergers and acquisitions is the ability to provide businesses with access to a pool of talented employees, including those with unique expertise and experience. Retaining key talent from the acquired company can also help ensure a smooth integration and maintain continuity in operations. However, these activities can be complex and involve significant risks and challenges, including legal, financial, and cultural considerations. To successfully navigate the process, companies need to have a clear understanding of all these considerations and the post-merger integration process.

Benefit #7: Diversification of Risk

The two were already the first and second-largest oil producers in the United States before merging. Following the deal, the organization had a huge market share and saw shares increase by 293%. For example, merging companies may be able to negotiate better pricing from suppliers due to increased purchasing power. Additionally, gaining access to a wider customer base and distribution channels can result in higher sales and revenue. As well as technical expertise and specialist skills, companies navigating an M&A can also benefit from regional market insights.

Benefit #3: Additional Revenue Streams

The benefits of mergers and acquisitions can be substantial, offering a wealth of opportunities for companies looking to grow, innovate, and strengthen their market position. By understanding the strategic motivations behind M&A and recognizing the primary benefits these transactions can provide, businesses can make informed decisions that drive long-term success. An M&A enables organisations to grow at an unprecedented rate, achieving key business objectives much faster than through organic growth alone. These developments, which would otherwise take years to achieve, are accelerated through mergers and acquisitions, leading to faster revenue and profit growth, as well as enhanced market value. Additionally, combining resources and eliminating duplicate functions can lead to increased operational efficiency and cost savings. Moreover, M&A can facilitate diversification and risk management by entering new markets or expanding product portfolios.

Though things are not always clear-cut, generally speaking, one can say that a merger happens when two companies that are equal in size and scale become a single entity. By buying out one of its suppliers or distributors, a business can eliminate an entire tier of costs. Specifically, buying out a supplier, which is known as a vertical merger, lets a company save on the margins the supplier was previously adding to its costs. And by buying out a distributor, a company often gains the ability to ship out products at a lower cost. By combining business activities, overall performance efficiency tends to increase and across-the-board costs tend to drop, due to the fact that each company leverages off of the other company's strengths.

The stock market capitalization-to-GDP ratio is a ratio used to determine whether an overall market is undervalued or overvalued compared to a historical average. The ratio can be used to focus on specific markets, such as the U.S. market, or it can be applied to the global market, depending on what values are used in the calculation. It is calculated by dividing the stock market cap by gross domestic product (GDP). The stock market capitalization-to-GDP ratio is also known as the Buffett Indicator—after investor Warren Buffett, who popularized its use. It is a measure of the total value of all publicly traded stocks in a market divided by that economy's gross domestic product (GDP).

1. It indicates that investors are willing to pay 20 times the average earnings over the past decade, adjusted for inflation.
2. The World Bank releases data on the Stock Market Capitalization to GDP for World which was 92% in 2018.
3. The stock market capitalization-to-GDP ratio is also known as the Buffett Indicator—after investor Warren Buffett, who popularized its use.
4. India has potential, but its current valuations suggest risk outweighs reward.
5. GDP growth in the second quarter of fiscal 2018 rose to 6.3 percent from 5.7 percent in the first quarter.

In recent years, however, determining what percentage level is accurate in showing undervaluation and overvaluation has been hotly debated, given that the ratio has been trending higher over a long period of time. Typically, a result that is greater than 100% is said to show that the market is overvalued, while a value of around 50%, which is near the historical average for the U.S. market, is said to show undervaluation. If the valuation ratio falls between 50% and 75%, the market can be said to be modestly undervalued.

Statistics

1. It is calculated by dividing the stock market cap by gross domestic product (GDP).
2. Industry-specific and extensively researched technical data (partially from exclusive partnerships).
3. Still, data from Bloomberg shows that the market cap to GDP ratio is above 100 percent for the first time since 2007.
4. However, in 2003, the ratio was around 130%, which was still overvalued, but the market went on to produce all-time highs over the next few years.
5. Until these indicators point to a more balanced market, Buffett is likely to remain on the sidelines.

The use of the stock market capitalization-to-GDP ratio increased in prominence after Warren Buffett once commented that it was "probably the best single measure of where valuations stand at any given moment." This indicates that the Indian stock market has outpaced economic growth. A high Buffett Indicator may mean that stocks are overpriced compared to the GDP they rest on, potentially setting investors up for losses if the economy can't support these inflated values. market cap to gdp ratio india GDP growth in the second quarter of fiscal 2018 rose to 6.3 percent from 5.7 percent in the first quarter.

Formula and Calculation of the Stock Market Capitalization-to-GDP Ratio

A reading above 100% suggests an overvalued market, while a lower reading indicates potential undervaluation. The market cap to the global GDP ratio can also be calculated instead of the ratio for a specific market. The World Bank releases data on the Stock Market Capitalization to GDP for World which was 92% in 2018. For a conservative, value-focused investor like Buffett, the Indian market’s inflated indicators are a turnoff. These signals don’t align with his investment philosophy, which focuses on intrinsic value and steady growth.

Market cap of listed domestic companies as share of GDP India 2005-2022

Some argue that listed enterprises in India may represent a smaller subset of industries where growth is higher than in the broader economy. To calculate the total value of all publicly traded stocks in the U.S., most analysts use The Wilshire 5000 Total Market Index, which is an index that represents the value of all stocks in the U.S. markets. The quarterly GDP is used as the denominator in the ratio calculation. This simple ratio gauges whether a market is overvalued or undervalued by comparing the total value of all publicly traded stocks in a country to the country’s GDP.

Market capitalization of listed domestic companies as share of gross domestic product in India from 2005 to 2022

The ratio compares the value of all stocks at an aggregate level to the value of the country's total output. The result of this calculation is the percentage of GDP that represents stock market value. The market cap to GDP ratio is a reflection of the valuation of listed enterprises vis-a-vis the value of goods and services produced in an economy. In theory, equity valuations should be linked to earnings expectations, which in turn are linked to the underlying economy. The indicator was popularised by the likes of Warren Buffet, who cited it as a key metric he watches. However, not everyone believes that the indicator is relevant to India.

Still, data from Bloomberg shows that the market cap to GDP ratio is above 100 percent for the first time since 2007. The indicator is not strictly comparable over time since the set of listed companies continues to change as new firms enter the market and some exit. As benchmark equity indices move from one record high to the next, indicators that reflect the value of listed firms vis-a-vis fundamental of the economy are flashing red.

India’s Buffett Indicator: A Warning Sign?

For the full year, the government’s statistical office has estimated growth at 6.5 percent. Indian equity markets have mostly ignored signs of economic sluggishness and surged due to strong inflows of domestic and overseas capital. Also, the market may be fair valued if the ratio falls between 75% and 90%, and modestly overvalued if it falls within the range of 90% and 115%.

Until these indicators point to a more balanced market, Buffett is likely to remain on the sidelines. In 2000, according to statistics at The World Bank, the market cap to GDP ratio for the U.S. was 153%, again a sign of an overvalued market. With the U.S. market falling sharply after the dotcom bubble burst, this ratio may have some predictive value in signaling peaks in the market.

As a stock analyst, it will be interesting to see the difference in values between the P/E and CAPE ratios.