Platinum and palladium: the other precious metals

Beyond gold and silver sit two metals most investors never touch: platinum and palladium. Both are genuinely rarer than gold — annual platinum mine output is less than a tenth of gold's — and both carry the 'precious' label. But their prices are set by something unglamorous: automobile exhaust rules. Understanding that single fact explains their booms, their busts, and why 'rarer than gold' has been such a misleading sales pitch.

What actually drives them

Platinum and palladium are catalysts: they scrub pollutants in vehicle exhaust systems, which consumes the large majority of palladium supply and a big share of platinum's (which also serves diesel vehicles, industry, and jewelry). Supply is astonishingly concentrated — South Africa dominates platinum, with Russia the swing producer of palladium — so strikes, power crises, and sanctions move prices violently. Unlike gold, these are industrial metals with a precious-metal costume: they trade on car production, emissions regulation, and mine politics, not on fear and inflation.

A tale of two decades

• Platinum traded ABOVE gold for most of history — often 2x — peaking near $2,250/oz in 2008. Then diesel's collapse after the 2015 Volkswagen emissions scandal gutted its biggest demand source; it spent the following decade roughly half the price of gold. 'Rarer than gold' didn't matter; demand did.
• Palladium ran the opposite way: gasoline-engine emission rules tightened worldwide, palladium was the required catalyst, supply couldn't respond, and the price ran from about $500/oz in 2016 to over $3,000 in early 2022 — beating almost every asset on earth.
• Then EVs — which need no catalytic converters at all — moved from thesis to reality, and palladium fell roughly 70% from its peak. The metal's largest use case has a visible expiration date.

The EV question hanging over both

Battery-electric vehicles eliminate the catalytic converter — the demand engine for both metals. That's an existential headwind for palladium especially. The counterweights: hybrids still need catalysts (and are booming), EV adoption is slower than projected in many markets, and platinum has a possible second act in hydrogen fuel cells and electrolyzers, which use it heavily. That hydrogen story is real technology with genuinely uncertain timing — which makes platinum a speculation on an industry that may take decades to matter, not a store of value.

If you still want exposure

1. Accept what the position is: a cyclical industrial bet on autos, emissions rules, South African supply, and (for platinum) a hydrogen option — not an inflation hedge.
2. Use physically-backed ETFs (PPLT for platinum, PALL for palladium) over coins; the physical premiums and spreads in these thin markets are punishing.
3. Size it as speculation: 1–2% of a portfolio at most, with the explicit possibility of 50%+ drawdowns.
4. Prefer platinum's diversified demand (and hydrogen optionality) over palladium's EV-exposed profile if choosing one — and note that the market has priced this view in for years.
5. Skip miners unless you genuinely want South African labor relations and power-grid risk layered on top of the metal bet.

The two metals, side by side

The supply-concentration row deserves emphasis because it cuts both ways. When most of the world's supply flows from two politically complicated countries, disruptions produce spectacular squeezes — palladium's run to $3,400 around Russia's invasion of Ukraine was exactly that. But concentration does nothing to repeal demand math, and the same metal that squeezed to records has since lost roughly two-thirds of its value as automakers thrifted loadings, substituted platinum, and watched EVs eat the gasoline-car fleet from the margins. That is the recurring PGM experience: violent rallies that reward traders who were already positioned, embedded in a secular demand question that punishes buy-and-hold investors who arrived because of the rally. Anyone treating these as 'like gold, but cheaper' has the analogy backwards — gold's value rests on nobody needing it for anything, which turns out to be the more durable foundation.

If you take a position anyway, respect the liquidity: these markets are thin enough that entering and exiting a meaningful position costs real spread, ETF options are limited and small, and prices gap violently on South African power outages and Russian export headlines. Size it like the speculation it is — low single digits of a portfolio at most — and decide your exit conditions before entry, because the PGM market will not give you calm moments to decide them later.

The bottom line

Platinum and palladium are fascinating, genuinely rare, and fundamentally industrial: their fortunes ride on exhaust regulations, mine politics, and the pace of electrification — not on the monetary fears that drive gold. Palladium's spectacular boom and bust is the whole lesson in one chart: rarity means nothing without demand, and demand here has an asterisk shaped like an EV. Treat them as small, informed speculations or skip them entirely; your portfolio's insurance policy they are not.