Why I’m Bullish on Platinum: A Comprehensive Report
After fifteen years of stagnation, platinum has woken up in a big way with an impressive 36% surge over the past two months. Even more exciting, this bull market may just be beginning.
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Although I typically focus on gold and silver in this newsletter, today I’m shifting gears to present the bullish case for platinum, which has been on an impressive run lately. I’ve been planning to write this report for some time, but platinum’s breakout and rapid surge over the past week caught even me off guard—as I’ve been fully occupied covering developments in gold and silver. The good news? I believe we’re still in the early stages of platinum’s bull market. In this report, I’ll explain why I’m bullish on platinum and explore the various ways you can invest in it.
For some background, platinum is a dense, malleable, ductile, and highly unreactive precious metal with a silver-white sheen. It’s also one of the rarest elements in Earth’s crust—roughly 30 times rarer than gold. About 90% of global production comes from a handful of regions, including Russia’s Ural Mountains, Colombia, Canada’s Sudbury Basin, and especially South Africa, which holds the largest reserves. Due to its scarcity, only a few hundred metric tonnes are produced annually. This limited supply, combined with its critical industrial and investment applications, makes platinum both highly valuable and a key precious metal commodity.
Thanks to its unique physical and chemical properties, platinum is heavily used in industrial and automotive applications. It plays a vital role in catalytic converters, laboratory equipment, electrical contacts and electrodes, platinum resistance thermometers, dental instruments, and the glass industry. Platinum is also popular in jewelry, especially when gold prices are high—as they are now. With gold trading at $3,323 an ounce and platinum at just $1,227, many consumers—particularly in China—are turning to platinum as a more affordable yet elegant alternative.
Unlike gold and silver—which have long histories as monetary metals used in coinage, currency backing, and investment—platinum was only discovered and understood relatively recently, in the 18th century. It has seen virtually no use as money, and only about 8% of its demand comes from investment. The remaining 92% is driven by other applications: automotive catalytic converters (37%), industrial uses (30%), and jewelry (24%), as illustrated in the pie chart below.
Owing to its substantial demand from industrial sectors, automotive applications, and jewelry, platinum exhibits high sensitivity to economic cycles, significantly more so than gold or silver. This sensitivity is one reason I’ve been less enthusiastic about platinum, especially as I actively anticipate and prepare for a major economic crisis (learn more). Consequently, I’ve favored gold and silver more heavily.
That said, I remain optimistic about platinum’s future and consider it an excellent portfolio diversifier for larger portfolios with a strong foundation of gold bullion for stability, complemented by some silver. Check out my recent reports for detailed insights into why I’m highly bullish on gold and silver.
I want to highlight the remarkably small size of the global platinum market compared to gold and silver, a factor that contributes to its greater volatility and choppiness, while also presenting significant upside potential when conditions align favorably. The total value of above-ground gold stock stands at an impressive $23.1 trillion, silver at $340.57 billion, and platinum at a mere $3.84 billion, as shown in the chart below. This small scale is one of the reasons why central banks and major institutional investors largely overlook platinum, favoring gold as their preferred asset.
The platinum market's volatility is further amplified by its heavy reliance on mine production concentrated in a few countries. South Africa leads with 3.86 million troy ounces mined in 2023, followed distantly by Russia with 739,000 troy ounces and Zimbabwe with 611,000 troy ounces, while the U.S. contributed a modest 93,000 troy ounces. This dependence on nations susceptible to labor strikes and geopolitical instability introduces significant uncertainty and price volatility to the platinum market.
One key driver behind the recent surge in platinum prices (which I’ll explore in greater detail shortly) and a cornerstone of the bullish case for platinum is the significant decline in supply from both mining and recycling. This supply has dropped by approximately 1.3 million troy ounces, or roughly 16%, since its 2021 peak, influenced by multiple factors.
In South Africa, the leading producer, persistent electricity shortages, labor strikes, escalating operational costs, and insufficient investment in new capacity have caused major supply disruptions. Similarly, Russia, the second-largest producer, has faced challenges due to international sanctions stemming from the Ukraine conflict.
Another contributing factor is the global decline in average ore quality, as high-grade deposits are exhausted, requiring increased effort and higher costs to extract the same quantity of platinum, which gradually erodes supply over time. Additionally, the low platinum prices in recent years (as I’ll show shortly) have rendered mining less profitable, further suppressing mine supply.