Why you should buy palladium and sell platinum

Palladium and platinum, two “cousin” metals and both part of the platinum-group metals (PGMs) on the periodic table, are used in catalytic converters and other industrial applications. Palladium is trading around $2,670 an ounce, with platinum on $1,177 an ounce.

Analysts at Citi think palladium could hit $3,000 by the third quarter of this year, says Jack Denton in Barron’s. A surge in catalytic-converter demand as many countries tighten emissions standards should lead to a sizeable global deficit in the metal this year and next. Russian producer Nornickel says problems at two of its Siberian mines will mean 15% to 20% lower production of PGMs than planned this year. Russia is the world’s largest producer of palladium and the second in platinum after South Africa.

The two metals are set to trade in opposite directions, says Adam Hoyes for Capital Economics. Platinum is used more intensively in diesel catalytic converters, but demand for diesel vehicles is falling as Europe has shifted towards petrol cars, which use more palladium. While palladium is essentially an industrial metal, platinum is also affected by investment demand, which may be about to fall back on rising US bond yields. Hoyes thinks palladium will hit $2,800/oz by the end of next year, but reckons platinum will fall to $800/oz by then.

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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.