Topping the list in terms of performance following the March 2020 collapse, we find metals such as silver (XAGUSD) given its dual usage as an investment and industrial metal, where especially the photovoltaic (PV) market is expected to be strong as many countries embark on renewable energy projects.
The platinum (XPTUSD) market has received a major boost during the past year and from trading at a +1000 dollar discount to gold in early November, the spread has since contracted by more than 400 dollars with platinum rising to a six-year high above $1200/oz. The latest rally followed news that China's auto sales surged in January, up 30% from last year and the 10th month of straight gains. This at a time where years of platinum oversupply as the automobile industry turned their attention to palladium has started to change. According to the World Platinum Investment Council, the substitution back to platinum (from palladium) has already started but the extent to which is currently being kept a secret by the major catalyst manufacturers Johnson Matthey, BASF and Umicore.
What is known, however, is the pick-up in investment demand via ETF’s and a lesser extent futures has risen strongly during the past few years with total ETF holdings currently at a near record 3.9 million ounces. Combining the ounces held by futures exchanges, investment demand currently accounts for close to 45% of the known above ground stocks (AGS). The move towards an expected supply deficit is occurring at a time of increased focus on tightening emission regulation in regular combustion engines while accelerating green hydrogen production has increased demand for platinum-based electrolyser capacity.
Having been in a downtrend for nearly a decade, platinum’s breakout last November helped attract renewed investment demand, not least after gold hit $2000/oz and its premium to platinum rose above $1000/oz. These developments helped attract increased switching activity between the two metals.