After years of silence, platinum has returned to the center stage with an astonishing increase this year. According to Wind Information data, on December 19th, the highest spot platinum price in the market rose to $1987 per ounce, reaching a new high since late July 2008. Although platinum prices are currently less than half of gold (London Gold Exchange, the same below), the increase this year has far exceeded the latter - as of now, platinum prices have increased by over 110% this year, while gold prices have increased by about 65% during the same period.

In my opinion, the core factor driving the rise in platinum prices is the changes in supply and demand.

On the one hand, it is the contraction of the supply side. As a core production area that accounts for over 70% of global platinum production, South Africa's platinum mining industry is facing a series of problems such as aging ore bodies, power shortages, and extreme weather, severely limiting production capacity. The forecast data released by the World Platinum Investment Council (WPIC) in November shows that the platinum market will experience a significant shortage for the third consecutive year this year, with an expected shortage of 22 tons.

On the other hand, there is growth on the demand side. Platinum group metals are known as the "industrial vitamins". In the global wave of green transformation, platinum's industrial properties have been endowed with new value, playing an irreplaceable key role in green energy fields such as hydrogen energy, electrolytic hydrogen production, and fuel cells. It is the combination of industrial demand and green transformation demand that has enabled platinum to break free from the pricing framework of traditional precious metals and form a unique industry driven logic.

The "substitution effect" triggered by high gold prices cannot be ignored. Since the beginning of this year, the price of gold has been steadily rising, even reaching a historical peak of $4381.484 per ounce in October. Prices of gold jewelry, gold bars, and other items have also skyrocketed. In this context, platinum with higher cost-effectiveness has become a substitute for many consumers and investors, leading to a significant increase in demand.

The data released by the World Platinum Investment Association also confirms this point: the demand for platinum jewelry is expected to increase by 7% year-on-year to 67 tons in 2025, the highest level since 2018; Investment demand is expected to increase by 6% year-on-year to 23 tons. It is worth mentioning that the Chinese market has become the core force driving the demand for platinum bars - the total demand for platinum bars is expected to increase by 47% year-on-year to 16 tons in 2025, reaching a four-year high, with the Chinese market reaching 13 tons.

In addition, the financial properties of platinum also provide strong support for its price. At the domestic level, platinum and palladium futures have recently been officially listed and traded on the Guangzhou Futures Exchange, which not only fills the gap in domestic platinum and palladium derivatives, but also helps to enhance China's international influence and pricing discourse power in the global platinum group metal industry. At the international level, the Federal Reserve has initiated a cycle of interest rate cuts, and the expectation of loose liquidity has significantly reduced the holding cost of precious metals, driving funds to rotate within the precious metal sector, from higher valued gold and silver to platinum, which is relatively undervalued.

Experts interviewed by the author generally believe that the platinum dominance pattern is expected to continue. On the one hand, the tight supply and demand situation of platinum is difficult to improve in the short term, and with the continuous development of the hydrogen energy industry, the industrial demand space for platinum will further open up, and the supply-demand gap may continue to widen; On the other hand, under the logic of pursuing cost-effective targets, the valuation advantage of platinum over gold may continue to attract funds to follow suit. (Securities Daily)