## 2025 Precious Metals Investment Guide: Can Platinum Outperform Gold?

The precious metals market continues to set new highs. Gold prices remain stable above $3,300 per ounce, and silver has also broken through the $38 mark. However, in this rally, **the future uses and investment potential of platinum** are often overlooked by investors. As a metal with both industrial and safe-haven attributes, platinum's performance this year warrants attention.

## Decade of Fluctuations: Price Trajectories of Platinum and Gold

Once the most valuable precious metal, platinum's price reached as high as $1,500 per ounce in 2014, far surpassing gold. But over the past decade, its trend has been highly volatile. In contrast, gold has experienced a steady upward trend. In April, gold hit a record high of $3,500 per ounce, while platinum's performance lagged behind.

Platinum prices have fluctuated dramatically over the past ten years. In early 2020, they even fell below $600 per ounce, then hovered around $1,000 for a long period. It wasn't until early 2025 that platinum saw a strong rebound. By July, platinum prices had risen to about $1,450 per ounce, indicating a significant recovery signal.

## Overview of Platinum Investment Channels

**Physical platinum** is the most direct way to hold the metal. Investors can purchase platinum coins, bars, or jewelry through precious metals dealers, banks, or online platforms. However, physical holdings require secure storage, and associated safekeeping fees and transaction costs are usually higher.

**Platinum ETFs and ETCs** offer convenience for investors who prefer not to hold physical metal. These funds track platinum price movements directly and can be easily incorporated into existing portfolios, especially suitable for stock market beginners. Compared to physical holdings, this approach is more flexible and cost-effective.

**Platinum mining company stocks** provide another indirect way to participate in the platinum market. By investing in platinum producers, investors can benefit from company earnings as well as rising platinum prices.

**Futures and options** are suitable for experienced traders. These derivatives allow hedging or speculation based on future platinum price expectations, but carry higher risks and potential returns than spot investments.

**Platinum CFD trading** opens new opportunities for active traders. Contracts for difference enable traders to leverage small capital to amplify positions, profiting from short-term platinum price fluctuations. This flexibility makes it popular for day trading and swing trading.

## Historical Trajectory and Industrial Value of Platinum

Understanding platinum's investment potential requires a review of its history. Unlike gold, **the future uses of platinum** depend not only on supply and demand but also on industrial demand. Platinum is widely used in the automotive industry, especially in diesel catalytic converters. Additionally, medical devices, chemical production, fuel cells, and green hydrogen manufacturing are strong demand sectors.

As a precious metal investment, platinum's history is relatively young. Gold and silver have been minted into currency since the 6th century AD, while platinum only entered circulation in the 19th century, with the first official platinum coins issued in Russia. In 1845, Russia banned platinum exports and coinage, leading to oversupply and a price collapse.

In the early 20th century, with industrial demand rebounding, platinum prices gradually recovered. Monarchs incorporated it into jewelry collections, as its unique luster better complemented diamonds. Its industrial value was also recognized—used in telegraph switch contacts and filaments. The patent for the Ostwald process (large-scale nitric acid production) in 1902 laid the foundation for platinum's application in automotive technology. As a result, platinum prices soared, reaching six times the price of gold in 1924.

World Wars and other economic crises interrupted this trend. It wasn't until around 2000 that platinum prices truly revived. Between 2000 and 2008, platinum experienced unprecedented growth, far outpacing gold gains. In March 2008, platinum hit a record high of $2,273 per ounce. This extraordinary rally was driven by multiple factors: market safe-haven demand triggered by the financial crisis, and platinum's industrial applications as a consumer good. During economic expansion, supply shortages often occurred, pushing prices higher. Long-term investors capitalized on this by buying during downturns, expecting future gains.

## Factors Supporting the Rise in 2025

So far in 2025, platinum has risen over 50%, from $900 in January to $1,450 in July. This strong rebound is driven by multiple factors:

**Supply-side pressures** include production cuts in major sources like South Africa, structural shortages (demand exceeding supply), and physical scarcity reflected in high lease rates.

**Macroeconomic environment** features geopolitical tensions and a weakening US dollar, both favoring dollar-denominated commodities.

**Demand support** comes from stable demand in China and the jewelry sector, along with surging investment demand (large ETF inflows).

The combination of supply shortages, steady demand, geopolitical risks, and a weak dollar has created a "perfect storm" environment for platinum.

## Differentiated Advantages of Platinum vs. Gold

Gold and platinum are both key precious metals assets, but each has unique features. Gold is renowned for its inflation hedge and store of value, while platinum stands out for its timeless elegance, jewelry value, and extensive industrial uses.

In automotive, medical, chemical, and **green energy sectors**, especially in fuel cells and hydrogen production, platinum is playing an increasingly critical role. Despite platinum's rarity being far greater than gold, its price performance over recent years has lagged significantly. Since 2019, gold has continually hit new highs, while platinum has stagnated or declined, causing the platinum-gold ratio to enter negative territory for the first time since 2011, marking the longest negative period for this indicator.

The long-term underperformance of platinum prices is mainly due to the decline in automotive demand. Demand for platinum in diesel catalytic converters has fallen sharply. However, 2025 shows signs of a turnaround. According to the World Platinum Investment Council, the total demand in 2025 is projected at 7,863 ounces, with total supply at 7,324 ounces, resulting in a structural deficit of 539 ounces.

Supply is expected to grow only 1%, reflecting structural constraints in mining. Recycling may increase by 12%, providing a new source of supply. On the demand side, overall demand is forecasted to decline by 1%, but automotive (+2%), jewelry (+2%), and investment (+7%) sectors are expected to grow, with industrial demand decreasing only 9%.

## 2025 Outlook and Trading Strategies for Platinum

From supply-demand balance, 2025 presents a neutral to mildly bullish outlook for platinum. Limited production capacity and difficulty in rapid expansion, coupled with relatively stable demand, suggest platinum will maintain its value. If industrial demand unexpectedly increases (currently forecasted at -9%), prices could rise sharply. Key variables include the US-China industrial trends and trade relations.

However, since July, after a significant rally, platinum faces risks of consolidation. While the rally reflects real physical shortages and dollar depreciation, it also contains speculative elements. Large profit-taking could impact the annual outlook. The dollar trend, demand stability (especially US tariffs), and supply dynamics will determine future performance. Lease rates should be an important indicator for investors, as changes reflect market fundamentals.

**Active traders** can leverage platinum's high volatility. Compared to gold and silver, platinum's more intense fluctuations create opportunities for short-term trading. Leverage tools like CFDs and futures are suitable for such traders. A common strategy is trend following: calculating short-term (10-day) and long-term (30-day) moving averages, buying when the short-term crosses above the long-term (with 5x leverage), and selling when it crosses below.

**Risk management** is crucial. The basic principle is to risk no more than 1-2% of total capital per trade, with stop-loss orders in place. For example, with €10,000 total capital, the maximum risk per trade is €100 (1%), and with a 2% stop-loss, position size with 5x leverage should be limited to €1,000.

**Conservative investors** may allocate platinum as part of their portfolio. Since platinum's supply-demand dynamics are independent of traditional assets like stocks, it can provide diversification and hedging benefits, potentially helping to offset US stock portfolio risks over the long term. Suitable tools include platinum ETFs/ETCs, physical platinum, or platinum stocks. The specific allocation should be based on individual risk appetite and time horizon. When adding platinum to a portfolio, note its higher volatility, which may increase overall risk; consider combining it with other precious metals and rebalancing periodically.

Currently, platinum stands at a critical juncture of opportunities and challenges. Whether for short-term trading or long-term allocation, investors should develop clear strategies based on their own circumstances.