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Platinum and palladium are 30 times rarer than gold

13 April 2022

 
  • Platinum and palladium are 30 times rarer than gold
  • Demand is increasing
  • The potential to outperform gold and silver
​​​​​​​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. 

Platinum and palladium are 30 times rarer than gold

Today we looking at the investment case for both platinum and palladium

Now platinum and palladium are part of what’s called platinum group metals (PGMs)…which are actually comprised 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. Iridium, osmium and ruthenium are even rarer than the other three. While a chemist would consider all PGMs ‘precious metals’— because PGMs exhibit similar chemical traits — an investor wouldn’t. 

Platinum end uses

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 have 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, its price is highly volatile.

Palladium end uses

Demand is increasing

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

They are the densest metals known on earth, resistant to chemicals and 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 working with hydrogen.  

While platinum and palladium are used in a wide variety of medical and electronic uses, their most important current use is in catalytic converters. A catalytic converter sits near the car engine and breaks down the exhaust’s pollution. In other words, it scrubs the exhaust fumes that come out of the back of your tailpipe before they enter the environment. 
It’s Pt and Pd’s increasing industrial utility that 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 the 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 alternative precious metals. Something that has the benefit of acting as a commodity as well as having the potential to be a long-term storm of wealth. 

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

The potential to outperform gold and silver

Why invest in precious metals that largely have industrial uses? It comes down 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. 
Warm regards,
The ABC Bullion Team