Platinum and Palladium vs. Gold and Silver


Mike Maloney and Jeff Clark discuss the topic of investment demand for platinum and palladium. According to The World Platinum Investment Council (WPIC) a substantial 9% increase in total platinum demand is expected in 2019. While only about 2.5% of platinum and palladium go towards investment demand, more than 95% is absorbed via industrial uses. With platinum and palladium performing very well in recent years, investors may be looking at these metals more than before.

Investment Demand for Platinum and Palladium Declines

The two hosts ask each other why platinum and palladium, from an investment demand standpoint remain in decline?

While the metals are not a favorite for investors, industrial demand is booming. However, their established use as an industrial metal comes with a caveat. Platinum and palladium tend to perform poorly during recessions. Easy to understand, more than 90% of demand is tied to catalytic converters. Car sales always decline in a recession.

Jeff Clark explains,

“I went back and looked at every recession since the early 1970s and how did platinum and palladium each doing during all the major recessions. And, ya you can see from the chart platinum does have a pretty dismal performance record during recessions itself.”

He reiterates that platinum and palladium do not act as safe-haven assets during recessions.

Finally, Clark pulls a chart showing the performance of precious metals during stock market crashes. The results are astounding and highlight gold as the ultimate hedge against inflation and market uncertainty. Still, palladium is in an epic bull market, rising more than 200% from its early 2016 lows. With a supply deficit forecast for 2019 demand for the metal remains robust.