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ABC Bullion

Demand is rising for platinum and palladium

12 October 2021

Tuesday 12 October 2021

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  • Platinum and palladium are 30 times rarer than gold

  • Demand is increasing

  • The precious metal outperforming both gold and silver

Shae Russell

Shae Russell,
Group Communications Manager

Dear Investor,

What makes a metal precious?

Scarcity, durability and utility.

Most people know that gold and silver are precious metals, but did you know there are five in total? They are gold, silver, platinum, palladium and rhodium.

All five are scarce, durable, and useful.

Every single electrical gadget or tech toy you own will contain a trace of these five elements. Often found in things such as reducing vehicle emission, jet engines, electronics, dental work, medical tools, pacemakers, cancer-fighting drugs or jewellery. 

Not only that, but the investment case for both platinum and palladium is only beginning…

Platinum and palladium are 30 times rarer than gold

Today we aren’t focusing on gold or silver. We’re switching gears and taking a look at the investment case for both platinum and palladium.

Now platinum and palladium are part of what’s called platinum group metals (PGMs)…which actually comprise of six metals: platinum (Pt), palladium (Pd), iridium (Ir), Osmium (Os) rhodium (Rh) and ruthenium (Ru).

PGMs are among the rarest metals on Earth. Platinum, palladium and rhodium are rarer than gold.

And iridium, osmium and ruthenium are even rarer than the other three. While a chemist would consider all PGMs ‘precious metals’— because PGMs exhibit the similar chemical traits — an investor wouldn’t.

The reason? Iridium, osmium, rhodium and ruthenium are extremely scarce. Their uses are solely industrial and their markets too small to have any sustainable value for investment purposes.

There has been attempts in North America to boost rhodium’s profile as a precious metal held by bullion dealers.

The problem is there is hardly any investment demand for rhodium. Of what there is, the market is too thin and the premiums on refined rhodium are absurd. Plus as an industrial metal, it’s price is highly volatile.

Demand is increasing

Platinum and palladium have a wide variety of industrial applications. And their versatility in goods makes them highly desirable for manufacturers. Plus, they are rare enough to be economically mined but nowhere near as common as gold or silver.

They are densest metals known on earth, resistant to chemicals, heat and don’t corrode. You’ll find them in jewellery, medical devices and a wide variety of electronics. It’s early days, but both are showing potential in with working hydrogen. 

They are used in a wide variety of medical and electronic uses. But their most important current use is in catalytic converters. A catalytic converter sits near the car engine and breaks down the pollution that comes out of the exhaust. In other words, it scrubs the exhaust fumes that come out of the back of your tail pipe before they enter the environment.

It’s Pt and Pd’s increasing industrial utility which is driving investor interest to these two metals. With the recent price fall in both, keen precious metal investors are looking at future demand for platinum and palladium increasing, knowing that supply of these is going to struggle to keep up.

Over the past couple of decades, the market for platinum and palladium has deepened giving investors access to an alternative precious metal. Something that has the benefit of acting like a commodity as well as having the potential to being a long term storm of wealth.

The precious metal outperforming both gold and silver

So why invest in precious metals that largely have industrial uses?

Simply put, it comes back to their scarcity and their inelastic supply. Platinum and palladium are extremely rare and supply is concentrated to just a handful of countries. Production of these can’t be ‘dialled’ up to meet extra demand…

In fact, in an interview with Trevor Raymond, director of research from the World Platinum Investment Council, he points out that mining supply for platinum and palladium lags demand, and it can take many years for new mining to come online.

Their volatility is attractive to many investors, with palladium in particular outperforming both gold and silver in the past.

To truly understand the investment case for both these rare, precious metals, click below to watch my interview with Trevor now. He and I discuss the current supply problems facing platinum and palladium and how more people are investing in these precious metals.

Until next time,

Shae Russell
Group Communications Manager,
For ABC Bullion