The Precious Metals Rise Continues as Platinum Joins In

In addition to silver, platinum has also seen its price rise rapidly in recent months. This is part of a broader trend where investors are increasingly preferring real assets over “paper assets.” Irresponsible spending and high national debts by the US and other governments are driving more and more investors towards precious metals and commodities.

The US dollar’s ​​reserve currency status has come under attack. As investors look for alternative (or traditional?) ways to store their wealth, the gold market has seen a historic rally. Since the beginning of 2024, the price of gold has risen by 62 percent. Compared to the bottoms reached in the fall of 2022, the price has more than doubled. The historic reserve asset and traditional way of storing wealth are making a comeback .

Now, platinum, which has been essentially flat or even down for much of this century, is rising from its ashes. The price of platinum is up 18 percent in June alone. It has gained 43 percent since its lows in early April.

Historically, platinum has been more expensive than gold for most periods. For example, in the 1960s, platinum was more than five times more expensive than gold, and platinum has generally cost 1.5-2 times more than gold. Currently, the price difference is three times in favor of gold.

Platinum is a much rarer metal than gold. While more than 3,600 tons of gold are produced annually, platinum production is estimated to be around 199 tons this year. Similar to silver, the platinum market has been in deficit in recent years, meaning that production has been lower than demand. Prices have remained stable for 10 years.

Now, however, the price of platinum has started to move. In June, platinum rose 18 percent. The last time a monthly increase was this large was in 2008. Now that the price of gold has doubled in three years, investors are looking for other “undervalued” metals and commodities to put their assets in. Platinum is one of them.

Platinum price per ounce since the late 1980s. Historically, platinum has been more expensive than gold.

Platinum Demand Strengthens

Unlike gold, platinum is widely used in industry. 40 percent of platinum demand comes from the automotive industry, where it is mainly used in catalytic converters. Jewelry demand accounts for 27 percent and other industrial demand accounts for 26 percent, according to the World Platinum Investment Council.

The slower-than-expected adoption of electric cars is having a positive impact on platinum. Both gasoline and hybrid cars use platinum in their catalytic converters.

In addition, rising gold prices have begun to put pressure on demand for gold jewelry in Asia and India

As a result, some people have started to choose platinum jewelry as an alternative. China’s platinum imports have increased in recent months, which indicates this trend.

Investor interest in platinum has also increased. 70,000 ounces of platinum have flowed into physical platinum-backed exchange-traded funds. This means that demand for fund units has increased, and to meet this demand, funds have increased their platinum positions.

The Start of a Long-Term Trend?

The recent price increase in platinum could be the beginning of a long-term trend where platinum somewhat regains its role among precious metals. While platinum will not become more expensive than gold anytime soon, it is likely to move closer to historical normal levels.

The situation at the beginning of this year, where one ounce of gold was worth three ounces of platinum, is historically unprecedented. Platinum has generally been more expensive than gold due to its rarity, and the current price difference is rather anomalous. Why should a metal that is 10 times rarer be three times cheaper than gold? This is probably the question many investors looking at platinum are asking.

Overall, the rise in platinum prices is part of a broader return of precious metals to finance. With debt levels and budgets in countries (especially the US) almost catastrophic, there is no other choice – the most natural path is to look to tangible assets. Platinum is one of them. Since platinum, like gold, has the properties of money, this metal has the potential to become a monetary asset for investors in physical form.

In addition to the state of public debt and budgets, markets are also being pressured by rising geopolitical tensions, the cost of the green revolution, the demographic crisis (aging population) and deglobalization. All this compote means that governments and central banks are forced to devalue their debt and currency one by one. Otherwise, the pressure of debt and interest payments would become unbearable. This means an increase in the prices of all real, tangible assets.