Andrew Bary

Platinum prices are rising after a long period in the doldrums -- and there could be more upside to the precious metal, which trades at a huge discount to gold.

Spot platinum is up $18 an ounce to $1,076 on Wednesday after a 5% gain on Tuesday, Bloomberg data show. The metal could be poised to break out of a trading range between $900 and $1,100 an ounce where it has traded for much of the past year -- and the past four years.

Gold has outshined platinum for some time. Gold prices are up $15 an ounce to $3,305 on Wednesday and have risen 36% in the past 12 months, while platinum has gained just 2%.

Platinum may be getting buoyed b y a bullish report earlier this week from the World Platinum Investment Council, an industry trade group, that highlighted lower supply and higher demand in the first quarter.

"For platinum investors, the long wait may be over. The fundamentals are finally getting reflected in the price," says Bob Minter, director of investment strategy for exchange-traded funds at Aberdeen Investments. The company runs the largest U.S. platinum exchange-traded fund, the Abrdn Physical Platinum Shares ETF, which has about $1 billion in assets.

Platinum has been in deficit for the past two years, meaning that demand has exceeded supply from mines and recycling. Another deficit is projected for 2025, meaning the market will need to draw on diminishing aboveground stocks of platinum.

Investor interest in gold and silver may be spilling over into platinum, which is a tiny market relative to gold. Total platinum supply is about seven million ounces annually from mining and recycling, while more than 100 million ounces of gold is mined each year.

The World Platinum Council estimated that investment demand rose about 300% in the first quarter relative to a year-earlier to 461,000 ounces, and that jewelry demand gained 9%, paced by growth in China.

The Abrdn ETF was up 2.5% at $98.87 on Wednesday after hitting a new 52-week high earlier in the session. It's up about 18% so far in 2025. Its annual management fee is 0.6% and holds physical platinum. Investors can see serial numbers of platinum bars on the ETF's website.

There are other ways to play platinum, too. The $200 million Sprott Physical Platinum and Palladium ETF holds roughly equal amounts of platinum and palladium, a sister metal to platinum. Investors can buy one-ounce platinum bars at Costco Wholesale -- and Canada issues one-ounce platinum coins.

Platinum miners include Anglo American Platinum and Sibanye Stillwater. Both stocks are sharply higher this year, but trade for a fraction of 2021 and 2022 levels. Both companies mine platinum group metals in South Africa.

More than half of mined platinum comes from South Africa, where mines often are old, deep underground, and expensive to operate. Labor, power, and political issues also have been a problem for South African platinum miners.

Platinum is now a poor man's gold -- and that may be boosting demand. Chinese consumers, who often view jewelry as a form of savings, are getting priced out of the gold market and turning to platinum.

"Platinum is incredibly cheap relative to gold, and platinum supply is very constrained," says John Ciampaglia, CEO of Sprott Asset Management.

Platinum used to be king in the world of precious metals. Back in May 2014, it traded for $1,500 an ounce -- a premium to gold, then around $1,300. In the decade before 2014, platinum usually traded higher than gold, hitting a premium of more than $1,000 an ounce in 2008.

But since 2014, platinum has dramatically lagged behind gold and the gold premium above platinum peaked at about $2,400 an ounce in April. It's now around $2,200 an ounce.

The situation could be changing: Platinum supply is constrained by high costs, and demand could be poised to rise.

The World Platinum Investment Council estimates that mined supply will decline 6% this year to 5.4 million ounces and that total supply including recycling will total seven million ounces. Demand is expected to fall 4% to eight million ounce -- still comfortably above supply. However, that overall projected drop in demand assumes a 2% drop in investment demand this year, despite a sharp rise in the first quarter.

Among the negatives for platinum is that unlike gold, it lacks demand from central banks. Automotive use, which accounts for about 40% of total demand, has been a question mark in recent years due to the growth in electric vehicles. The main use of platinum and palladium in cars is in catalytic converters -- and EVs don't need them. Investors have been concerned that automotive platinum demand could drop sharply over the next decade if EVs see continued global growth.

However, EV demand and market share are stalling out as car buyers around the world are loath to give up convenient internal combustion engines. That is bullish for platinum, and increasingly popular hybrid cars tend to use platinum rather than palladium in their catalytic converters -- another positive factor.

Chinese jewelry demand could be a major positive. Platinum can act as a substitute for white gold in engagement rings and other jewelry.

Platinum has long been off the investor map, but the recent rally could be the start of a longer term move on favorable supply and demand fundamentals. It won't take much investment demand to move a market where the value of supply is just $7 billion annually.

Write to Andrew Bary at andrew.bary@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 21, 2025 14:34 ET (18:34 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.