In today’s Finshots, we tell you why platinum’s been on a rise lately and whether it deserves a place in the ‘safe-haven’ portfolio.

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The Story

I first got hooked on platinum as a kid when my uncle told me, “Everyone runs after gold, but it’s platinum and diamonds that are truly expensive.” That stuck somewhere in my head. And years later, right before my wedding, it popped up again. Amid all the jewellery shopping, my investor brain couldn’t help but compare gold and platinum (yeah, my gold-loving parents and in-laws didn’t like it one bit). But what I found was fascinating.

See, platinum isn’t just another shiny precious metal. It belongs to a special club on the periodic table called the “platinum group metals” (PGMs) — alongside palladium, rhodium, ruthenium, iridium, and osmium. These are some of the rarest elements on Earth. And platinum is their undisputed star.

It’s incredibly dense and stable meaning it doesn’t rust, tarnish, or react with air and water. Even acids can’t corrode it, except for one rare chemical mix called “aqua regia” (a mix of nitric and hydrochloric acid) that can dissolve gold too. Hold a small cube of platinum, and it feels oddly heavy. In fact, it’s like holding condensed time itself, because platinum is older than the Earth, and scientists believe most of it came from meteorites that crashed here billions of years ago. Which means when you wear it, you’re literally wearing space metal.

But that rarity takes a whole new meaning with platinum. About 70% of it comes from the Bushveld Complex in South Africa. It’s a geological formation so deep and metal-rich that miners call it “the platinum heart of the world.” Russia contributes another 10–12%, while Zimbabwe and North America fill in the rest.

Extracting it, though, is a herculean task since for every 10 tonnes of ore mined, you get just a few grams of platinum. From start to finish, it can take six months to produce a single ounce of pure metal.

Which brings us to today.

While the internet has been focusing on gold’s rally, it’s platinum that’s been quietly outshining precious metals. It’s up about 85% versus gold’s 52% returns this year. And to understand why, let’s take it from the top.

It’s a classic case of demand and supply.

Let’s start with demand, which has got two big drivers.

The first is autocatalysts. Nearly 40% of all platinum mined every year ends up inside car engines, sitting in tiny honeycomb-shaped devices called catalytic converters. They’re the silent heroes that turn toxic exhaust fumes into less harmful gases. It wasn’t this way all along. For decades, automakers preferred palladium for petrol engines and platinum for diesel. But when palladium prices shot past $3,000 an ounce in 2022, manufacturers began swapping it out for platinum. And that single shift, according to the World Platinum Investment Council (WPIC), could add nearly 850,000 ounces of new demand this year (roughly 12% of total global supply).

The second driver is less obvious: industrial demand that comprises mostly chemical, glass and medical manufacturing, and forms about 30% of the mix. An interesting bit here is the hydrogen fuel cells, which convert hydrogen into electricity. And platinum acts as a catalyst in electrolyzers that split water into hydrogen and oxygen. So, as governments pour billions into green-hydrogen projects, platinum could quietly become the metal behind the revolution. The rest of the demand comes from jewellery (25%) and investment (about 10%).

Then, there’s supply.

Actually, the Earth simply doesn’t produce enough platinum. South Africa’s platinum mines are deep, old, and energy-hungry. And the country’s chronic electricity crisis has made things worse. Blackouts have halted smelters, delayed processing, and even flooded shafts. Russia, the second-largest producer, has its own headaches from sanctions, export bottlenecks, and ageing infrastructure.

Combine the two, and you get what the WPIC calls a “record deficit” — nearly one million ounces short last year.

But hold on. Before you think I’ve been singing platinum’s praises, let me tell you why this isn’t a sure shot ride up. Because there’s a reason platinum never became as beloved, or as stable, as gold.

Just think about it. Why don’t central banks, the biggest buyers of precious metals, hoard platinum the way they hoard gold in their reserves?

The answer is surprisingly philosophical. Reserves aren’t about rarity. They’re about trust and utility.

Gold has millennia of faith behind it. And it’s what central banks hold because it behaves like money — standardised 400-ounce bars, deepest liquidity in the precious metals market, and a global lending & leasing network that makes it a universal hedge with zero counterparty risk. That’s the reason why, when the IMF set up the global reserve framework, gold became the chosen anchor. And it’s also why the IMF’s reserve database (COFER) tracks currencies and gold, but not platinum. Because platinum’s market is tiny (just about 5-6% of gold mining output), more industrial led as well as cyclical, and less liquid. And that’s not what central banks want. They look for a geopolitical hedge that can be mobilised in days without moving the market.

In fact, central banks don’t just avoid platinum, silver, or palladium but they practically can’t hold them. That’s because these metals simply aren’t recognised by the international banking system and central banking community as monetary reserve assets.

So, gold thrives on history, belief as well as supply, whereas platinum thrives on chemistry. And when the economy slows, chemistry loses to psychology. That’s why platinum prices crashed nearly 60% during the 2008 financial crisis and again after the 2015 Dieselgate scandal that wrecked diesel-engine demand in Europe.

Sidebar: In 2015, the US Environmental Protection Agency discovered that Volkswagen had been rigging its cars to cheat emissions tests, allowing vehicles to emit 40 times the legal limit of nitrogen oxide for over a decade using software called a “defeat device.” This scandal came to be known as Dieselgate.

You can even see it in the charts. Platinum has fallen during nearly every major US recession, often by double digits. And this goes back again to its utility. Since most of its demand is industrial, when growth cools and factories shut, the metal’s purpose pauses. Gold, meanwhile, rallies in the very same conditions. That’s why it has lagged gold and silver and has minimal investment demand compared to gold.

“Okay Finshots, but what makes platinum investable for us now?”, you might ask.

There’s no straight answer to that. But what you can understand is that you can profit from it by knowing that precious metals move in phases. And platinum, like all precious metals, moves in cycles.

So what cycle are we in today? One way to gauge that is by looking at the capex-to-depreciation ratio. It simply tells us how much mining companies are reinvesting to replace ageing assets (or mines in this case). Right now, that ratio for platinum is at its lowest in decades. Which means miners are not spending enough to open new mines or upgrade old ones. Platinum supply actually peaked around 8 million ounces in 2019 and has been slipping since. And even if prices rise, output might not catch up for years.

Sure, EVs may eventually replace normal cars and the demand for platinum could fade with it. But there’s an interesting contrast here because the world still sells about 56% internal-combustion vehicles a year of the total vehicle sales. And even trucks, hybrids, and industrial engines will need catalytic converters for years to come. Combine that with low inventories, long mining lead times, and hesitant reinvestment… and you get a market where even small demand shocks can push prices sharply higher.

So when buyers can’t get enough platinum from mines, they hit the spot market. And that’s when prices start to dance. The backup source is recycled metal from old jewellery and car parts, but that market moves at a snail’s pace. It’s too small (20% of the overall platinum supply in 2024) and too illiquid to quench the kind of demand we’re seeing now.

So what do you, the Indian investor, make of it all?

Well, options here are limited. India doesn’t yet have a platinum ETF. You can buy physical bars or coins from select refiners, or turn to global physical ETFs. Physical platinum bars (without any jewellery modification) attract 3% GST on purchase, and a capital gains tax on sale. Not an eye popping proposition, but it’s an option if you’re looking to diversify your safe haven bets. 

But even if you do so, brace for volatility. Expect phases where EV headlines could scare you. And know that if deficits persist while producers stay parsimonious on capex, price has only one pressure valve left.

As for the “safe haven” drawer: platinum won’t replace gold in a central bank vault or in your emergency corpus. It is, however, a mispriced claim on scarcity plus chemistry.

That’s why my compromise at the wedding shopping counter was a platinum ring I could defend to the family and to my spreadsheet. Two years on, it still feels like I’m wearing a little sliver of space, and the thesis finally has company.

So tell us, dear readers, where are your bets placed?

Until then…

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