When I last wrote about Platinum here was June 23rd.
This was the chart.
When I first wrote here about it on May 15th it was around $1000.
Platinum is now at $1400.
This is the current situation:
Certainly, a trend for appreciating precious metals is at work but there is also the theme of ‘strategic and critical metals’ anxiety pushing Platinum but on top of that, under the hood is AI. Not the AI under the hood of cars but AI as a core driver of market moves. AI means that the internal combustion engine is not going away because the implied future demand for energy is now infinite. This is because the demand for AI is infinite and AI is near enough silicon and pure energy consumption. As such, all forms of energy will be utilised, which is why, if you wondered, nuclear is now no longer the scourge of humanity and back in favour like its 1950 again. As the world is going to burn carbon based fuels alongside all the other energy generating materials, you better have Platinum to try to clean up the mess.
You also better have Palladium.
The trouble is there is only roughly 200 tonnes of each mined every year. That is basically none. Even precious and rare Gold has a 3200 tonne production a year. I focus on these numbers because it's so simple and stark. 200 tonnes is about what 100 American families consume by weight of stuff a year. It’s a rounding error in the modern economic scheme of things. The price of Platinum and Palladium must rise.
It is quite a tricky prospect to ride this near certainty and as such I hold ETF and Sibanye Stillwater (SBSW) I'm not a fan of pricey or difficult to hold stocks. This is why physical ETFs are my choice of instrument and SBSW sneaks in as the only stock I can stomach. Meanwhile the chartist in me sees Palladium as the sweet spot. Here is why.
In old market parlance, Palladium is the fast horse.
But like the market stall trader selling steak knives I have to say, ‘that’s not all, Mr, take a look at this!’
This chart tells a story of Platinum and Palladium following Gold. You expect that, but what you see in 2016 was how Gold and Platinum used to be valued. Platinum and Gold were 1:1. That parity is gone but why would it not return? Production is 3200 tonnes for Gold, 200 tonnes for Platinum and for a very long time Platinum was more expensive than Gold, just as it is for Rolex owners today.
From this chart you can also see how their price can explode as Palladium did in 2020-2022. The supply is tight because production is so small.
In consequence I am very much talking my own book because I am well vested in Platinum and Palladium because this technical set up looks spectacular and the fundamentals are there to back it up. When I started writing about Platinum and Palladium it was contrarian. Not anymore.