Platinum’s 80% surge: 3 hidden forces driving it

In a recent interview on the Money Metals podcast, host Mike Maharrey welcomed Edward Sterck, Director of Research at the World Platinum Investment Council, to help gold and silver investors understand why platinum and palladium are suddenly demanding attention. 

Maharrey framed the conversation as a deliberate shift away from the usual focus on gold and silver, aiming to introduce listeners to another precious metal with real investment relevance and unusual market mechanics.

Sterck’s message was simple but pointed. Platinum is not moving in a vacuum. It is being pulled by tightening physical availability, policy, and geopolitics, and a longer-term demand story that looks different from what most investors assume.

The first hidden force: A deficit market colliding with vanishing aboveground stocks

Sterck says both platinum and palladium are in deficit on WPIC estimates, and that shortfall is one of the foundational supports under prices. But he also explains why platinum’s price response appeared delayed, despite what he calls the third year of significant deficits.

In any commodity market, aboveground stocks matter as much as the annual balance. Those inventories provide liquidity and cushion the impact of deficits. Sterck says platinum entered this period with excess aboveground stocks, and over the last three years, those buffers have been drawn down.

He argues the market reached an inflection point around May of this year, when aboveground stocks had fallen to what he describes as unsustainably low levels. In his view, the tightening in the physical safety net is a major reason platinum began responding so strongly, helping turn a slow-burning deficit into a market that suddenly feels tight.

Sterck also notes that platinum investment demand is adding pressure. He points to robust demand for platinum investment products and highlights China’s bar and coin buying, which he says has grown dramatically since 2019 and has now made China the largest platinum bar and coin market in the world, overtaking the United States. He adds that ETF activity has also remained supportive, and he stresses that ETF flows can meaningfully swing net investment demand, even turning negative during profit taking.

The second hidden force: Geographic metal shortages and a three-way tug of war

Maharrey asks whether platinum has experienced the kind of regional dislocation that has hit silver, with tariff fears pulling metal into the United States and leaving London short. Sterck says the answer is yes, very much so.

He describes London as very short metal. One signal, he says, is the over-the-counter forward curve in London being in strong backwardation, which reflects tightness in prompt availability. Sterck ties that directly to inventory building in the United States, which has drawn metal away from traditional hubs.

Because platinum is a much smaller market than silver, Sterck says the flow numbers can look modest even when they are market-moving. He estimates the platinum market is about one hundredth the size of the silver market by volume. Against that backdrop, he cites about 400,000 ounces flowing into the United States into visible exchange warehouses, with additional, undisclosed metal likely also moving.

He adds a second competitor. China is not just passively consuming platinum through industry and jewelry. It is also pulling on physical supply through a new trading infrastructure. Sterck points to physically settled platinum and palladium contracts launched on the Guang Futures Exchange in China, saying this has increased demand.

The result, in his telling, is a three-way geographic contest for physical metal. London is tight. The United States is building inventories. China is ramping up physical engagement. That tug of war keeps tension elevated and reduces the likelihood that the market relaxes quickly.

The third hidden force: Policy, Geopolitics, and the palladium Ripple effect

Maharrey notes that palladium has also performed strongly, estimating it is up about 63 percent this year, while platinum is up almost 80 percent. Sterck explains that platinum and palladium are linked through shared catalytic roles and substitution dynamics, but he also stresses that each metal has its own risks and catalysts.

For palladium, Sterck says the longer-term outlook had weighed on prices as electrification threatened catalytic converter demand, especially since he estimates a little more than 80 percent of palladium end use is tied to catalytic converters. Platinum, by contrast, has more diverse demand, with catalytic converters representing about 40 to 46 percent of platinum demand and jewelry around 26 percent.

Still, palladium has rebounded. Sterck cites two key drivers. One is the reciprocal substitution relationship with platinum, where a platinum move higher can help pull palladium along. The second is policy uncertainty in the United States.

Sterck references the Section 232 investigation into critical mineral supply and national security concerns. He also points to a separate anti-dumping investigation in which some US market participants alleged Russia was dumping palladium into global markets below market rates. Sterck says the anti-dumping investigation concluded there is harm being done to the US domestic palladium supply and that action will be taken.

He emphasizes the uncertainty. The market does not yet know the outcome of Section 232, and it does not yet know what specific action will follow from the anti-dumping case. But he argues that the risk of future constraints is enough to create market tension, since buyers worry that platinum and palladium may not be available in the United States at current prices in the future.

Geopolitics also shows up through supply concentration. Sterck says Russia accounts for about 40 percent of global palladium supply, with South Africa also about 40 percent. Platinum is more dominated by South Africa, with about 70 percent coming from South Africa and only about 11 percent from Russia. He suggests this matters to automakers because increasing palladium loadings can increase exposure to Russian supply chain risk.

Platinum and palladium demand: Why autos matter, and why platinum has more options

Maharrey asks how platinum and palladium differ in automotive applications, including the gasoline versus diesel split. Sterck says catalytic converters typically rely on platinum, palladium, and rhodium.

Historically, diesel has been much richer in platinum and rhodium, while gasoline has used a palladium-heavy mix. Sterck says technological innovation has enabled more substitution, especially in gasoline engines, allowing automakers to alter the balance of metals when relative prices change.

He gives a clean example. When palladium ran to well over $3,500 per ounce while platinum traded close to $1,000 per ounce, automakers shifted toward more platinum and less palladium. He notes that today platinum is trading at a premium to palladium, meaning substitution could potentially reverse over time, even if supply chain risk makes that decision more complicated.

On longer-run demand, Sterck says WPIC expects electrification to continue, but more slowly than many commentators anticipated. He attributes that to consumer reluctance beyond early adopters and to some governments rowing back on decarbonization commitments, including the United States.

Even so, he argues the drop in catalytic converter demand is not as steep as many assume. Emissions legislation continues to tighten, and any vehicle with an internal combustion engine, including hybrids, needs higher PGM loadings to comply. Sterck says platinum plus palladium demand is relatively flat through 2030 in WPIC numbers, with a negative 1.7 percent CAGR through 2030.

Where platinum separates itself is what comes next. Sterck highlights green hydrogen and fuel cells as demand channels tied to decarbonization, where platinum is a critical catalyst. He explains that platinum catalysts can be used to produce green hydrogen using renewable electricity, and platinum catalysts are also used in fuel cells that recombine hydrogen with oxygen to generate electricity and create water.

Sterck argues that hydrogen can displace natural gas in many applications and help decarbonize sectors like aviation. That energy transition narrative, he suggests, can offset long-run erosion in catalytic converter demand more effectively for platinum than for palladium, which he says remains more dependent on internal combustion engines unless new end uses emerge.

A quick note on rhodium: A tiny market with Outsized importance

Maharrey asks for a basic explanation of rhodium, a metal many investors only hear about in headlines. Sterck says rhodium is much scarcer than platinum and palladium, with a market of about 750,000 ounces per year.

Like the other PGMs, rhodium is used in catalytic converters. Sterck also notes it is used in industrial processes such as glass fiber production, where molten silica is highly corrosive and requires materials that can withstand extreme conditions. He adds that rhodium is used in jewelry as well, often as plating for white gold because the underlying alloy is not naturally white.

The broader takeaway is that these metals are not easily replaced. Their catalytic properties are unique, and Sterck argues there is little that can substitute for them at scale in several critical industrial processes.

Why Gold investors are paying attention again

Maharrey recalls that platinum used to trade above gold and asks whether platinum could regain parity. Sterck responds with a long view. Since 1880, he says that platinum has, on average, traded at twice the price of gold.

He argues that a return toward that relationship is possible, especially given platinum’s small, less liquid market structure and the fact that many end uses are highly price inelastic. But he also explains why gold is so dominant today. Gold is about 30 times larger than platinum as a market, far more liquid, and has a millennia-long role as a currency-like metal outside government control.

Sterck points to central bank accumulation as a major gold driver, and he makes a striking claim that central bank gold holdings are now higher than Treasury holdings in value terms for the first time since the late 1980s. He adds that US asset managers are shifting portfolios toward more gold, and he argues the world does not have enough gold for that transition, pushing spillover demand into other precious metals like silver, platinum, and palladium.