Gold medal for platinum investors

Platinum power: Why the metal is finally shining

For some time, platinum has sat in the shadow of its flashier metallic cousins – gold as the safe haven, and palladium as the darling of auto catalysts. Yet recently, platinum has found new sparkle as an investment asset. Exchange-traded funds (ETFs) backed by the metal have seen renewed
inflows, and prices have strengthened. But the question is: why now?

A modern metal

For one thing, platinum is increasingly a metal for the modern economy. It isn’t just precious, it’s practical. And not just for one or two uses. It’s key to diverse industries:

• Catalytic converters: Reducing harmful emissions from vehicles.
• Fertiliser production: Essential for catalysts in ammonia-based fertiliser, which underpins global agriculture.
• Hydrogen fuel cells: A cornerstone technology in the clean energy transition, with platinum at the heart of electrolysers and fuel cells.
• Medicine: Platinum compounds such as cisplatin are vital in chemotherapy treatment.

Platinum’s varied uses means it straddles the line between a traditional precious metal as a store of
value and a strategic industrial commodity.

Macroeconomics and mettle

Several macroeconomic trends are combining to help this metal show its mettle.

The green energy transition is a megatrend that needs plenty of platinum. Although hydrocarbons still dominate our energy mix, according to the International Energy Agency (IEA), US$2 trillion went into clean energy in 2024, which is US$800 billion more than went into fossil fuels. The IEA also predicts that “the world is set to add more than 5 500 gigawatts (GW) of new renewable energy capacity between 2024 and 2030 – almost three times the increase seen between 2017 and 2023.” Platinum will be along for this ride.

There is also a substitution effect in play. Platinum and palladium can perform several of the same functions. This means the deciding factor when choosing between the two is price. Having had a strong run, palladium is now expensive. Automakers in particular are shifting their preference to platinum.

The old favourite of supply and demand is also key. South Africa is still the globe’s dominant producer of platinum. However, power shortages, ageing mines,  and stagnant GDP growth have conspired to hamper the capacity to pull platinum out of the ground and deliver it to all the uses listed above. The beauty of holding platinum in an ETF is that you aren’t betting on a company being able to supply it. You own a stake in physical platinum in a vault. So supply shortages benefit you by lifting prices.

Defence and growth

All of this helps platinum to play both a defensive and a growth role. The silvery metal has the attributes of a store of value during times of volatility, much like gold. But there is also a growth narrative – as the modern economy demands more and more green energy, clean air, and healthcare, platinum is  increasingly a growth story.

Our 1nvest Platinum ETF has rewarded investors with all the benefits of this strong run the metal is having globally. Read more about this product here: 1nvest Platinum ETF.