Is platinum undervalued compared to gold?
Platinum has often been described as “undervalued” relative to gold because it is rarer in the earth’s crust, has important industrial uses, and historically traded at a premium to gold before industrial demand and market structure changed; however, price relationships have varied widely, and recent market moves show platinum can trade above or below gold depending on supply, demand, and macro factors[2][1].
Why people call platinum undervalued
– Rarity and mining supply. Platinum is much rarer than gold in mined annual supply and in the crust, so simple scarcity arguments make it seem intrinsically more valuable than gold[1].
– Industrial demand. A large share of platinum is consumed by industry, especially automotive catalytic converters and chemical processes, meaning tight supply or rising industrial activity can push prices higher[2].
– Historical premium. For much of the 20th century platinum often traded at a premium to gold, so long stretches where platinum trades lower create the perception of underpricing relative to historical norms[1].
Why platinum has traded below gold
– Demand mix and investor behavior. Gold is both an industrial metal and, more importantly, a global monetary and investment asset. Central banks, ETFs, jewelry demand and safe-haven buying make gold much more resilient as a financial asset than platinum, which reduces platinum’s price support in times of macro stress[1].
– Automotive technology shifts. Diesel vehicle declines in some markets and improvements in catalyst efficiency have sometimes reduced platinum demand or shifted demand among platinum, palladium and rhodium, altering price relationships[2].
– Market liquidity and market structure. Gold markets are vastly deeper and more liquid than platinum markets; price discovery, speculative flows, and the presence of large investment products amplify gold’s price moves relative to platinum[1].
Changes that can make platinum look undervalued or overvalued
– Industrial cycles. Strong rebounds in auto production, stricter emissions rules favoring platinum over palladium, or growth in hydrogen fuel-cell uses (where platinum is key) can increase platinum demand and push prices above gold[2].
– Supply shocks. Mining disruptions in primary producing countries or rising costs of production can tighten platinum supply and lift prices[2].
– Financial flows. If investors increase allocations to platinum via ETFs or futures, that alone can raise its price even without a parallel industrial demand change[1].
Recent evidence and market context
– In 2025 both gold and platinum experienced notable strength, and at times platinum recorded multi-year highs driven by concentrated trading in new Chinese contracts and strong demand, showing platinum can rally sharply and even approach or exceed historic levels versus gold[2].
– Price forecasts and consensus views vary; some forecasting aggregates showed platinum average prices well below gold averages for 2025, reflecting differing expectations about industrial demand and investor flows[1].
How to evaluate whether platinum is truly undervalued
– Compare fundamentals, not just spot ratios. Look at mined supply, recycling trends, industrial demand forecasts (especially automotive and hydrogen), and scrap supply to judge real scarcity[2].
– Consider financial-demand differences. Account for central bank, ETF, jewelry and safe-haven buying that sustainably support gold but not platinum[1].
– Monitor market structure and liquidity. Thinner markets can exaggerate moves; a large short or concentrated long position in a small market can distort the apparent fair value[2].
– Use scenario analysis. A reasonable framework is to model several plausible futures for auto demand, regulation, and supply disruptions; in scenarios favoring diesel, hydrogen, or stricter emissions, platinum often emerges as underpriced relative to gold.
Practical takeaways for investors and users
– If you are an industrial user, hedge or secure supply when technical or regulatory trends point to greater platinum demand. Market rallies can be sharp and painful for buyers caught long on spot shortages[2].
– If you are a financial investor seeking a safe-haven or portfolio ballast, gold remains the more established choice because of deeper liquidity and broader monetary uses[1].
– If you seek speculative upside, platinum may offer more upside in specific scenarios (tight supply, policy shifts, or industrial adoption) but also carries higher idiosyncratic risk because of its smaller market[2][1].
Sources
https://www.bullionvault.com/gold-news/infographics/ai-gold-precious-metal-price-forecasts
https://www.bullionvault.com/gold-news/gold-price-news/platinum-gfex-palladium-121720251