The overlooked choice in precious metals investment: The truth and opportunities of platinum

What Exactly Is Platinum?

In 1803, British chemist William Wollaston dissolved platinum ore in aqua regia, added mercury cyanide solution, and finally refined a new metallic element—palladium. The name originates from the asteroid Pallas-Athena, the Greek goddess of wisdom, which led to the discovery of the chemical element Palladium.

As a noble metal known for its stable properties and exceptional hardness, platinum is renowned for its high price and significant price volatility. This metal is widely used in the automotive industry (accounting for 80%-85%), electronics, dental treatments, and metal alloys. Many white gold products on the market are actually alloys of platinum and palladium.

The most critical industrial role of platinum is as a catalyst. In automotive catalytic converters, platinum effectively reduces exhaust emissions from internal combustion engines, a function that is increasingly important as environmental standards become stricter. It can be said that the automotive industry’s projected demand for platinum directly determines the future market capacity of this precious metal.

From the supply side, Russia and South Africa are the world’s leading platinum producers. However, Russia’s platinum reserves are declining year by year, and South Africa’s output has shrunk due to factors like miners’ strikes, leading to a sustained tight global supply.

Cyclical Price Fluctuation Patterns of Platinum

Key Historical Periods Review

Late 1970s — Rising demand for automotive exhaust catalysts increased industrial preference for platinum, leading to price increases.

1980s — Political turmoil in South Africa caused supply disruptions, resulting in significant price fluctuations.

1990s — Global economic growth boosted platinum demand, with prices steadily rising.

2000-2008 — This period saw a sharp rise in platinum prices, with prices surpassing $2,000 per ounce by 2008.

2008 Financial Crisis — Prices plummeted sharply but gradually recovered afterward.

2011-2015 — Slowing global economy and weakening Chinese demand caused prices to decline again.

Post-2019 — South Africa’s power crisis worsened, with frequent mine shutdowns, paralyzing platinum mining.

2020 — COVID-19 outbreak hampered global economic activity, impacting the automotive industry. On March 26, South Africa announced a lockdown, halting all mining operations for maintenance. China’s auto production also plummeted, causing platinum prices to fall to $1,460/oz. However, subsequent fiscal and monetary stimulus measures by various countries led to a rapid automotive industry recovery. Coupled with slow supply chain restoration, platinum prices hit a record high of $3,017/oz in May 2021.

2022 — The Russia-Ukraine conflict triggered market fears of disrupted Russian supply, pushing prices up to $4,440/oz. But the widespread adoption of electric vehicles reduced demand for catalysts, and a slowing global economy also exerted downward pressure, leading to a sharp decline in prices.

2023-2025 — Uncertainties on both supply and demand sides caused prices to fluctuate within the $1,500-$2,200/oz range.

Market Outlook for the First Half of 2025

As of June 2025, platinum prices are generally weak and volatile. Starting the year at $1,140, a brief rebound to $1,260 occurred in March, but due to rising penetration of electric vehicles (22-25%) and sluggish car sales, prices retreated to $1,030-$1,080. In June, driven by short covering and US dollar depreciation, prices rebounded to $1,110, but the overall decline for the year remains over 10%.

Three key factors influencing prices:

Weak structural demand — According to IEA data, global electric vehicle share is projected to reach 22-25% in 2025, further shrinking demand for traditional catalytic converters. Slowing car sales in Europe and China also pressure actual platinum demand.

Stable supply fundamentals — Despite sanctions on Russia, exports are maintained through neutral markets; South Africa’s improved power situation allows gradual capacity recovery.

Market sentiment leaning pessimistic — Investment funds favor safe-haven assets like gold and silver, benefiting from geopolitical risks and global central banks’ gold-buying trends. Meanwhile, platinum’s industrial demand weakens, with ETF holdings and net long futures positions continuing to decline.

Second Half Outlook

The platinum market is expected to remain dominated by weak structural demand. As electric vehicle penetration exceeds 25% and traditional auto growth slows, industrial platinum demand is unlikely to see significant increases. Based on baseline assumptions (stable supply + global GDP growth of 2.5-3%), the average platinum price will range between $1,050 and $1,150. If long-term support at $900 is reached, a rebound may occur.

If events such as Russian export restrictions, South African mine accidents, or breakthroughs in hydrogen energy applications happen, prices could surge to $1,300-$1,400; conversely, if the European and Chinese auto markets weaken further or the US dollar remains strong, platinum could fall below $1,000, testing support at $900-$950.

The Fundamental Differences Between Platinum, Palladium, and Gold

Industrial Goods vs. Safe-Haven Assets

The value of platinum and palladium depends on supply and demand, not investor sentiment. Gold, due to its safe-haven properties, prices more reflect investor psychology. This difference is especially evident during crises. During COVID-19, platinum and palladium suffered heavily due to manufacturing halts; palladium even reached $2,754/oz in February 2020, then dropped to $1,743 by mid-March, a 36% decline; gold, benefiting from its safe-haven status, remained relatively stable.

Competition Between Palladium and Platinum

Over the past decade, palladium has shown an upward trend. Although both are platinum-group metals with similar appearance and primary use in automotive catalytic converters, palladium mainly serves gasoline and hybrid vehicles, which are increasingly favored under stricter environmental standards. Besides automotive use, palladium is widely applied in aerospace, aviation, maritime, defense, nuclear energy, dental, jewelry, and surgical instrument manufacturing.

In September 2017, palladium prices first surpassed platinum, breaking the decade-long trend of higher platinum prices. This reflects a market shift from diesel to gasoline vehicles and policy-driven emission standards. Since palladium’s annual output is less than 0.005 times that of gold, and ground inventories are declining, supply-demand imbalance has driven prices higher.

However, some analysts warn that palladium’s rally may be excessive. Elevated prices are prompting automakers to develop alternatives. Chemical manufacturer BASF claims to have developed new catalysts replacing palladium with platinum. If technological breakthroughs occur and are widely adopted, demand for platinum could rise while palladium prices weaken. But this potential bearish factor is currently insufficient to offset palladium’s short-term gains.

The Unique Position of Gold

Gold is the most popular investment precious metal, especially during economic uncertainty, as it effectively hedges inflation. During crises or slowdowns, investors flock to gold for safety, pushing prices higher; during economic booms, investors tend to sell gold to invest in higher-yield assets, lowering gold prices. War and geopolitical tensions also boost gold demand.

However, gold’s growth potential is relatively limited because its price is more driven by investor preferences than market supply and demand.

The Logic of Opposite Movements

As an industrial commodity, platinum demand is highly correlated with economic cycles, with price trends mirroring stocks. During economic growth, platinum demand increases, pushing prices up; during downturns, demand shrinks, and prices fall.

Gold, as a hedge against the US dollar, tends to move inversely to stocks. When inflation is high, investors sell stocks and buy gold for safety; during economic expansion, they sell gold to invest in stocks. This inverse correlation makes gold and platinum effective components of diversified investment portfolios.

Competitive Advantages of Investing in Platinum

Why Is Platinum Worth Paying Attention To?

Compared to gold and silver, platinum investors are fewer but more professional, with a strong reliance on technical analysis, heightened risk awareness, and often better timing for entry and exit.

Hedge against inflation — Like gold, platinum is priced in USD; when the dollar depreciates, platinum prices tend to rise, providing inflation protection.

Healthy supply-demand fundamentals — With ongoing growth in the global automotive industry, platinum demand continues to increase, while supply is constrained by strikes and underinvestment, creating a structural imbalance that supports price growth.

High volatility — Relative to gold and silver, platinum reacts more sharply to supply and demand changes, with large price swings and sensitive technical signals, offering trading opportunities in the short to medium term.

Indispensable industrial demand — Over 80% of platinum is used in automotive catalytic converters to reduce emissions, and it cannot be fully replaced by other metals in gasoline vehicles, providing solid fundamental support.

Multiple Pathways for Investing in Platinum

Retail investors need to clarify basic issues such as trading methods, platform choices, and margin mechanisms before entering the platinum market. Currently, the main channels include:

Spot Platinum

Investors purchase and physically own platinum, but must bear sales tax, insurance, and storage costs. Compared to gold, platinum’s casting difficulty and costs are higher, and investors pay a premium above the metal’s spot price, which is usually also higher than gold.

ETF Index Funds

Investing through platinum ETFs involves no physical transaction taxes or fees, only low management fees, but investors do not own the physical platinum.

Futures Contracts

Futures are standardized exchange-traded contracts related to future physical delivery. As financial derivatives, platinum futures allow participants to lock in future prices by entering into contracts to buy or sell a specified amount of platinum at a fixed price at a designated time.

Contract for Difference (CFD)

CFD is an agreement between investors and trading platforms to profit from the difference between opening and closing prices.

Main advantages of CFDs:

No need for physical delivery, storage, or extra costs; supports both long and short positions, offering flexible profit mechanisms; usually commission-free, with platforms earning through spreads; lower costs than spot trading, with more flexible trading methods; leverage allows large trades with relatively small margin, offering potential for significant gains with limited capital.

Risks of CFDs:

Leverage is a double-edged sword; losses can be magnified, increasing risk; margin requirements are strict, requiring investors to maintain sufficient account funds.

Overall Evaluation

Compared to more common investment options, platinum investment is relatively new and more specialized. To succeed in the platinum market, investors need to deeply understand the factors influencing prices, compare performance with other precious metals, and recognize platinum’s unique characteristics from multiple perspectives. Ultimately, choosing an investment approach that matches one’s risk tolerance is crucial. Platinum’s high volatility and industrial demand foundation create unique trading opportunities, but also demand investors possess market knowledge and risk management skills.