Why Platinum Could Soon Close In on Gold and Silver

Many years ago, platinum was fondly referred to as “the rich people’s gold” as platinum was then trading at a premium when compared to gold. Given that platinum is currently having its own bull run, many investors are wondering whether the old times are coming back and the rare metal could regain its status of trading at a premium relative to the yellow metal. We explore some factors that point to a continued rally in the platinum market for the foreseeable future.

For almost a decade, the price of platinum traded at about $1,000 for each ounce. However, the price of the metal broke above this price level recently and has remained trending upwards. This suggests that the metal has reached a point when fundamental market factors support its continued upward movement. After all, it remained stagnant for a decade and there must be strong tailwinds that have now given it upward momentum.

One of those fundamental factors acting as winds beneath the wings of the metal is limited supply relative to demand. Being a rare metal, the supply of platinum is limited globally. Total production capacity for 2025 is estimated to be just 218 tons, and South Africa is the top producer. Russia comes in at second, and Zimbabwe takes the third spot. Combined, that trio produces about 75% of the global supply of this metal. Given the sanctions hamstringing Russia from fully participating in global trade, available platinum on the market may not be sufficient to meet existing demand, which is likely to keep pushing the metal’s price upwards.

It is also noteworthy that the futures market for platinum isn’t as liquid as that of silver or gold. For example, at the start of this month, the futures contracts for platinum totaled $6.4 billion, covering nearly 89,000 contracts. In contrast, the futures market for gold at the same time stood at $178 billion while that for silver was worth more than $33 billion.

As you can see, the futures markets of silver and gold are highly liquid while that for platinum has limited liquidity. Markets with deep liquidity rarely experience high volatility while those with limited liquidity have higher chances of elevated volatility levels. Platinum could therefore experience volatility that pushes its price markedly higher, similar to the way Bitcoin used to make huge moves upwards driven by limited liquidity. Volatility in the BTC market has only tamped down recently as institutional holders stockpile the crypto and reduce market activity.

All the factors above suggest that platinum’s rally could only just be beginning and the runway may have plenty of space left. Leading extractors of the metal like Platinum Group Metals Ltd. (NYSE American: PLG) (TSE: PTM) are well positioned to leverage the upturn in the market of this rare metal as it seeks to reclaims its moniker as the rich people’s gold.

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