The Hidden Revival of Platinum and Palladium

TheHidden Revival of Platinum and Palladium

Thearticle below is an excerpt from our Q1 2025 commentary.

“Platinum Breaking Out on Surging Demand From China”
~Bloomberg, May 20th, 2025

“BMWbets on petrol and sees rocky road to electrification… BMW has pledged tocontinue investing in combustion and hybrid technologies.”
~Financial Times, February 11, 2025

“SouthAfrican miner Impala Platinum may close its Canadian palladium mine earlierthan planned after prices for the metal used in gasoline vehicles haveplummeted more 70% over the last three years.”
~The Northern Miner, February 27, 2025

Thetime has come, we believe, to turn serious attention—and capital—towards theplatinum group metals and their related equities. Over the past 18 months, agrowing number of supply and demand signals have begun to flash in concert,suggesting that a long-overlooked corner of the commodity world may be on thecusp of making a significant bullish move.We say this with some sense of historical symmetry. It has been a long whilesince we last held meaningful positions in the global PGM markets. In fact, onehas to rewind the tape all the way back to the late 1990s and early 2000s tofind us actively invested in the sector. For the curious (and the nostalgic),we’ve included a Barron’s commodity column of ours dated January 15, 2000—inretrospect in was a great call.

The late’90s, of course, offered a classic setup: an obscure group of metals largelydismissed by the broader investment community, and a handful of public equitiespriced for irrelevance. It was precisely then that the opportunity provedgreatest. Between their lows in the late 1990s and their highs just before the2008 financial crisis, shares of South Africa’s Rustenburg Platinum (now AngloAmerican Platinum) and Impala Platinum staged extraordinary bullishmoves—rising, in dollar terms, by a factor of 30 and 60, respectively.

Today, webelieve investors are once again being offered an opportunity that bears morethan a passing resemblance to that earlier moment—one that, in time, couldprove every bit as spectacular.

The bearmarket in platinum, now in its sixteenth year, has become a study in endurance.Palladium, for its part, has spent nearly four years in decline. Sentimentis bleak. The prevailing narrative—repeated with the assurance of conventionalwisdom—holds that electric vehicles will permanently erode demand for platinumgroup metals. It’s a tidy story, but one that, we would argue, has alreadybegun to unravel.

In ourview, today’s deficit conditions in both platinum and palladium are not onlyreal— they’re likely to persist far longer than the market currently expects.Demand has held up with surprising resilience. Supply, from both mined andrecycled sources, continues to disappoint. And most importantly, investmentdemand—a vital swing factor in the platinum market—is beginning to re-emerge.

As forthe equities, they’ve absorbed every bit of the bearish mood. Since peakingjust three years ago, the major PGM producers have fallen nearly 80%. They are,to put it plainly, priced for despair. But if we are right—if PGM prices areindeed poised to move materially higher— then these companies, trading atvaluations last seen in the depths of previous cycles, may once again offer thekind of extraordinary returns we witnessed a quarter-century ago. The time toact, we believe, is now.

What,then, makes us so bullish?

Thereare three key reasons why we think the bear market in PGMs is drawing to aclose— each of which we’ll explore in the sections that follow

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