Platinum, often overshadowed by gold, is now gaining attention due to its scarcity and rising demand. This precious metal is facing significant supply deficits, which have been ongoing for several years. The main issue lies in South Africa, where chronic electricity shortages, labor disputes, and regulatory hurdles are severely impacting production. South Africa produces about 75% of the world’s platinum, making these challenges particularly critical.
The supply chain is further strained by limited recycling and the lack of new mines. High costs and geological rarity make it difficult to establish new mining operations, which means that the gap between supply and demand is unlikely to be filled anytime soon. As a result, above-ground inventories are dwindling rapidly, threatening a potential supply collapse within a couple of years.
On the demand side, platinum is experiencing a surge across various sectors. The automotive industry, which uses platinum in catalytic converters, continues to drive demand. Additionally, there is growing interest in platinum jewelry, particularly in China. Industrial applications and investment demand are also on the rise, with investors increasingly recognizing platinum’s undervalued potential compared to other precious metals like gold.
This imbalance between supply and demand is already having a significant impact on platinum prices. The metal has surged by over 40% this year, outpacing gold’s gains. This price momentum is likely to continue as the market adjusts to the persistent deficits and dwindling inventories. Investors are shifting their focus towards platinum, seeing it as a strategic opportunity for growth. The combination of supply constraints and rising demand makes platinum’s scarcity a bullish signal, potentially propelling its price to new heights in the coming years.