Many couples celebrate their silver and golden wedding anniversaries. Fewer manage what the British monarch achieved last November – 70 years of marriage, which is marked by a platinum anniversary.
It’s a mark of the value typically associated with platinum – dubbed ‘rich man’s gold’ and noted for its durability and resistance to corrosion– that the precious metal is used for gifts to mark a particularly lengthy union.
The National Association of Jewellers says of platinum: “This extraordinary metal is far rarer than gold. In fact, it’s said that, if all the platinum ever mined were poured into an Olympic-sized swimming pool, it would barely cover your ankles!
“Naturally extremely white, platinum alloys usually contain 95% platinum. Because of its denseness and rarity, platinum jewellery is more expensive than gold. Platinum does not tarnish and is naturally hypoallergenic.”
Platinum vs palladium
Less well known than platinum, palladium is another naturally white metal which for many years has been a less expensive alternative – often substantially cheaper – than its cousin. Platinum is nearly twice as dense as palladium, so platinum jewellery requires more grams of the metal than a similar piece made of palladium and items are correspondingly heavier.
The National Association of Jewellers describes palladium as “a dream material for jewellery designers who enjoy creating larger, more dramatic designs.
“Very slightly darker and much lower in density than platinum, it is a member of the platinum family and popular as an affordable and much lighter alternative. Like platinum, it is also hypoallergenic and tarnish resistant.”
A long history
While both platinum and palladium have a long history, their status as recognised precious metals is more recent.
“During the 17th century, traces of platinum lined the gold mines in South America, and the Spanish miners considered the metal a nuisance,” reports the gold and silver online retailer JM Bullion. However, when introduced to Europe in the 18th century the metal’s special properties attracted the attention of scientists.
Post-World War II, platinum’s dual status as an industrial and jewellery metal became established and South Africa took over as the major producer of platinum group metals
In more recent times platinum has had a chequered production history and prices have fluctuated. In the late 1990s, it was briefly out of fashion as mints and refineries exited the market. Prices began rising again in the early 21st century, as producers returned to the marketplace and new coins and bars were promoted to investors.
Demand for platinum and palladium has grown in line with realisation that the metals are more ubiquitous than gold and silver. Since the mid-1970s they have been used, together with rhodium – another corrosion-resistant member of the platinum group – by car manufacturers in producing catalytic converters and by medical equipment producers for electrodes.
Platinum is an essential ingredient of the surgical instruments used in dentistry, as well as for production of strong permanent magnets. Palladium is an essential part of white gold, also used in producing dental equipment and provides some of the finer workings in designer watches.
Yet as an investment they’re not a one-way bet. “Platinum and palladium, though fantastic precious metals with great investment potential, aren’t as popular as silver and gold,” cautions JM Bullion. “Because of the very small supply, the prices of these metals are more volatile than those of silver and gold, making them less popular with casual investors.”
Both platinum and palladium futures trade on the New York Mercantile division of the Chicago Mercantile Exchange unlike rhodium, which trades only in the physical market.
The Volkswagen diesel emissions scandal that erupted in 2015 could prove a watershed moment for platinum, palladium and rhodium.
Currently palladium is used for most petrol converters, but is less efficient at removing diesel pollutants – so there platinum dominates.
But future demand for all three metals could be dented by the accelerated advent of the electric car. Analysts suggest that in time, battery electric technologies will mean auto makers no longer need produce catalytic converters.
However, use of the metals may transfer to the production of fuel cells used in electric cars – although opinion divides on whether this will maintain consumption at current levels. Some believe that other growing markets, such as China, will compensate for the demise of the diesel in Europe and maintain demand.
How soon could this happen? Expert predictions range from as little as five years’ time to as late as 2040, although a date somewhere midway seems the most likely bet.
How did platinum and palladium perform in 2017? Very differently – the price of palladium was buoyant and has doubled in the past two years, while platinum was out of favour. Miners have been reluctant to step up supply of platinum as demand has tailed off. As a result, output of palladium has also been restricted although demand for palladium is still growing.
Less than 10 years ago the price of platinum was five times more than palladium, yet it began 2018 at under $1,000 per ounce. Having overtaken its cousin last September for the first time in almost two decades, palladium has recently traded nearer $1,100, close to its 2001 all-time high.
This could mean industrial consumers switching from palladium to platinum as a more cost-effective solution in the year ahead. Yet that advantage could well prove to be short-lived if demand for platinum revives due to its current lower price and the gap between the two starts narrowing.
The World Platinum Investment Council, backed by six leading producers of the metal, believes the metal still has a bright future. The Council recently opened a Shanghai office to help drum up interest from institutional investors.
And while China’s platinum demand is forecast to be flat this year – after a 3% decline in 2017, India could step in with a forecast increase in demand of as much as 20% in 2018.