Platinum's Incredible Rally Surprises Even The Insiders
News Summary
Platinum has surged over 81.5% year-to-date in 2025, reclaiming highs above $1,650 per ounce not seen since 2013. This rally makes it the best-performing precious metal this year, driven by structural supply constraints and surging investor interest. According to the World Platinum Investment Council (WPIC), Chinese demand for platinum jewelry increased by 137% year-over-year in Q2, with bar and coin investments up 176%. Despite the rally, platinum remains historically undervalued against gold; it still takes around 2.5 ounces of platinum to buy one ounce of gold, a ratio well above historical averages. The WPIC expects the platinum market to remain in deficit for a third consecutive year, with shortfalls averaging 620,000 ounces annually through 2029, representing about 8% of global demand. Commerzbank forecasts platinum to hit $1,700 per ounce by the end of 2026, citing persistent deficits and robust investor flows. However, Sibanye-Stillwater CEO Richard Stewart expressed surprise at the velocity of the rally, attributing it more to investor activity than fundamental industrial growth, specifically noting a lack of growth from the automotive sector. Meanwhile, Valterra Platinum is progressing with plans to expand its Mogalakwena mine in South Africa, targeting increased output beyond 2030.
Background
Platinum is a rare precious metal with diverse applications in jewelry, investment, and industrial sectors such as automotive catalysts, chemical processing, and medical devices. Global platinum supply is highly concentrated, primarily originating from South Africa, Russia, and Zimbabwe, with South Africa being the largest producer. Its market performance is influenced by various factors including mine production, recycling, industrial demand (particularly from the automotive sector), and investor sentiment. In recent years, the platinum market has experienced supply disruptions and demand fluctuations. Structural supply constraints, such as aging mines, labor disputes, and underinvestment in capital expenditure, have consistently challenged the industry. Meanwhile, China, as one of the world's largest consumer markets for jewelry and precious metals, exerts significant influence on platinum prices. The historical price ratio between platinum and gold serves as a key indicator for assessing its relative valuation.
In-Depth AI Insights
What are the true drivers behind platinum's price surge, given the lack of significant industrial demand growth? Investor activity, rather than traditional industrial fundamentals, appears to be the primary driver of the current platinum rally, suggesting a