B. Soaring demand from the auto sector. Both platinum and palladium play important roles in pollution control, especially in the auto sector.
And the auto industry’s demand for both metals is off the charts, with 2013 showing the industry’s demand for palladium exceeding available supplies by as much as a half million ounces.
At the same time …
C: Investment demand is rising sharply, largely due to China. According to HSBC Bank and the latest data, Chinese investment demand for platinum recently hit a 30-month high, increasing 11.2 percent to a total of 69.98 metric tons for the three quarters of 2013 ended September 30. Palladium inflows hit an eight-month high.
In addition, investment demand globally, overall, rose 9.1 percent — largely due to the advent of trading of the new South African ETF, NewPlat.
NewPlat is traded on the Johannesburg Stock Exchange and tracks platinum’s price in rand, which has made it a very attractive investment, not only for South African investors, but also South African and Russian platinum group companies that use the new ETF for hedging and delivery policies.
Is it any wonder that the war cycles could make platinum and palladium such explosive markets?
I don’t think so, especially when you consider the strategic importance they play in the world and that Russia is such a major producer of both metals.
Russia, supplying 42 percent of the world’s palladium, is already in a supply crunch, with the country’s above-ground inventories having fallen from roughly 1.5 million ounces in 2007 to as little as 100,000 ounces at the end of 2013.