THE METAL WITH +50% GROWTH POTENTIAL — not gold or silver — Transcript

While the whole market is watching gold and silver, there are two metals that remain in the shadows. Those are platinum and palladium. Many investors believe there's no difference between them because both are used in industry and both have gone through a rather severe correction along with the rest of the precious metals market. But one is on the verge of growing by more than 50%, while the other metal is structurally dying.

And in today's video, we'll figure out what's actually happening in the platinum and palladium market, why they're moving in different directions, and what you should buy right now.

[music] Dima, well, practically all investors have to some extent dealt with gold and silver.

And yet I quite rarely hear of anyone investing in platinum and palladium. So, let's maybe look at the fundamentals of what these metals are and what they're actually used for.

The main value of these metals lies in their catalytic properties. So, essentially, what does that mean?

They speed up chemical processes without being consumed themselves. And the main application for these metals is in the auto industry, specifically in the production of automotive catalytic converters.

So, what is a catalytic converter in very simple terms? Imagine a large number of these tiny honeycombs, and inside these honeycombs, these metals are sprayed in a thin layer.

And when exhaust gases pass through the honeycombs, by speeding up chemical processes, harmful substances are separated and held inside these converters.

So, that's roughly how it works. And as I said, the main sector of application is the automotive industry, specifically internal combustion engines.

But as we all know, sales of electric cars are growing very actively on the market, and they essentially don't need catalytic converters.

And this is where it gets interesting. We've come to a bit of a fork in the road.

Right here, Dima, there's one particular point. If both metals are used in engines, why does the shift to electric vehicles affect them differently?

Yes. Well, first I'd like to start with the specifics of their use in catalytic converters.

It's worth noting that, for example, platinum shows its best catalytic properties at lower temperatures and in oxygen-rich conditions.

Therefore, it's mainly used in catalytic converters for diesel engines. If we're talking about palladium, it works better at higher temperatures and is mainly used in gasoline engines. But in reality, technology doesn't stand still, and essentially both metals are now interchangeable. But the key reason for the different prospects of these metals lies in the structure of demand for them.

If we look at platinum, according to data for 2025, about 40% of platinum consumption was in the auto industry, about 29% in jewelry, and about 25% in industry, namely chemicals, oil refining, and medicine. And about 5% of demand is purely investment purchases.

But I'd like to specifically highlight one sector called hydrogen energy. And in fact, this is a very promising area because platinum is an essential catalyst in electrolyzers and fuel cells.

Uh, well, in efforts to produce, let's say, green hydrogen. Uh, the sector is still small, but it's growing very rapidly.

However, if we look at palladium consumption, the situation looks fundamentally different. About 82% of palladium consumption is accounted for by automotive catalysts. So, Dima, it turns out that with platinum we have this diversified demand, while palladium is essentially just a bet on one business segment.

Yes, exactly. And what's interesting to note is that this business segment, essentially internal combustion engines, has very hazy prospects because we all understand that the active growth in electric car sales is gradually pushing internal combustion engines out of the market. Of course, this won't happen quickly, but in reality, the prospects for the sector itself look very hazy.

But okay, that's clear. We've discussed the demand structure for these metals, but I'd like to touch on supply separately. And here things look especially interesting from the perspective of palladium.

Well, yes, if you look at palladium, we have this kind of structural deficit there.

This supports the price of the metal to a certain extent. So, let's figure out what is actually going on in there.

Yes, exactly. There is a shortage in the palladium market, but the key question lies in the reasons for this shortage.

The main reason is a significant drop in palladium sales volumes from Russia because tariffs and duties were imposed on Russian palladium, which essentially made buying palladium from Russia simply economically unfeasible for consumers because the price including duties just skyrockets. So, palladium sales from Russia fell by 11% year-on-year. And essentially, this is equivalent to that very shortage observed in the palladium market around 260,000 oz.

If you remove this drop in sales of Russian palladium, just set it aside, then we'll see that the shortage essentially becomes near zero there.

It turns out that palladium is a bet that the conflict between Russia and Ukraine will continue, that we will see the continuation of this kind of sanctions pressure from developed countries, and essentially, this will limit the flow of palladium onto the market.

Well, yes, that's exactly it. And as you can see, it's a very shaky situation.

For example, according to JP Morgan Bank forecasts, the current palladium shortage in 2026, as I said, will be around 260,000 oz.

In 2027, the situation will normalize, and the shortage will be about 70,000 there. And by 2028, the palladium market will move into a steady surplus. And what's more, this surplus could be really quite long-lasting. Well, why?

Because we are seeing, in principle, a decline in demand for cars with internal combustion engines.

Okay, Dima, but what about other sources of demand? Don't they compensate for this electric car situation?

Well, as I said earlier, roughly a bit more than 80% of demand comes from the auto industry, and the rest, like a bit less than 20%, is industry, mainly electronics.

Demand here is stable, but it's not growing. If we talk about investment demand for palladium, it's basically near zero.

That's about 2,000 oz a year. You can basically leave it out of the equation.

So, that's why actually if you look at palladium, the potentially falling demand from the auto industry, well, it's unclear what could compensate for it. Actually, that's why we take a very conservative view on palladium's prospects, as you know, and we aren't building a position in it. Because if you look at the overall situation in metals, precious metals, the reasons for the correction and the pressure we see on metals, it's spread roughly equally across gold, silver, platinum, and palladium. But the fundamentals for each of these metals are fundamentally different. So, actually there are other things to look at besides palladium.

Well, okay. Well, let's, for example, look at platinum as well. There I understand there are many more catalysts for its growth, but for some reason the market isn't noticing it either, and it's not reflected in the quotes.

Yes, as I've already said, the reasons for the correction in all metals are, in general, the same.

We saw a very rapid growth, for example, in gold at the beginning of this year.

And naturally, after such rapid growth happens in a short time, and it affected all metals, the market needs a certain amount of time to stabilize so that short-term speculators can lock in profits and calmly exit the metal. For media attention to move away from this market segment, it takes a certain amount of time.

And on top of that, the situation with Iran was added, specifically the military conflict, which led to energy prices rising, inflation expectations rising, and accordingly investors adjusted their, well, their attitude toward future monetary policy from like global central banks, and including the Fed. That is, inves

fundamentals for each of these metals are fundamentally different. So, actually there are other things to look at besides palladium. Well, okay. Well, let's, for example, look at platinum as well. There I understand there are many more catalysts for its growth, but for

some reason the market isn't noticing it either, and it's not reflected in the quotes. Yes, as I've already said, the reasons for the correction in all metals are, in general, the same.

We saw a very rapid growth, for example, in gold at the beginning of this year.

And naturally, after such rapid growth happens in a short time, and it affected all metals, the market needs a certain amount of time to stabilize so that short-term speculators can lock in profits and calmly exit the metal. For

media attention to move away from this market segment, it takes a certain amount of time.

And on top of that, the situation with Iran was added, specifically the military conflict, which led to energy prices rising, inflation expectations rising, and accordingly investors adjusted their, well, their attitude toward future monetary policy from like global central banks, and including the

Fed. That is, investors now expect a tighter monetary policy in the future, specifically a potential increase in interest rates.

And as you and I know, metals don't pay coupons. They don't bring dividends, unlike say short-term bonds, for example, or just bank deposits, which can simply yield, well, some kind of return. And if that yield grows accordingly, these money market

instruments start to look more attractive. And certainly such a macro environment puts pressure on metals.

And at the same time, we shouldn't forget that this kind of policy usually leads to a strengthening of the US dollar, and all commodities are traded in US dollars, and for them this is an extremely negative factor.

Now, Dem, it really is such a good moment for like building a position in metals. We recently filmed several episodes about gold, about silver, about lithium.

But let's get into the details. Specifically from a fundamental standpoint, what's happening with platinum, why it should be bought.

From the perspective of platinum's prospects, I would highlight three points. First, it's worth looking at the structure, again, of supply and demand, specifically at what's happening in the market. And in the platinum market, we're seeing a real structural deficit.

And unlike the palladium market, analysts believe this deficit will be long-term and sustainable. In terms of supply, the bulk of platinum is mined in South Africa.

But if you look at the numbers and forecasts, you see that platinum mining in South Africa is stagnating. It's not growing [clears throat] at all.

And the balance is mostly maintained through the recycling of secondary raw materials, namely scrap.

Well, here too, Dem, I think we shouldn't rush into things. You mentioned the deficit earlier, including in palladium.

And you said that wasn't really an argument for buying that metal. Does this story look different somehow?

Well, yes, it looks different because, as I'll say again, the entire palladium deficit essentially rests on one factor.

The drop in supply from the Russian Federation. And that's a very shaky, unstable foundation. If the political vector changes, duties on Russian palladium will be lifted, and the market will instantly shift from deficit to surplus.

So, the situation looks fundamentally different. The second point, probably a more tactical one, that I wanted to highlight regarding the platinum market.

We're seeing growing interest in buying platinum from China. For example, open interest in futures contracts on the Guangzhou Exchange has grown significantly in recent months.

Plus, we see from the March tracking that platinum imports into China totaled 330,000 oz.

And that's a lot. For instance, compared to platinum production data for 2025, that's about 6% of the total volume produced in 2025.

So, China bought a lot of platinum in a very short period. So, we see that certain market players are starting to bet on this metal.

And the third thing I'd focus on is how demand is changing dynamically in other categories. So, we mentioned that 40% of platinum consumption goes to auto catalysts, and that's a controversial slowing sector.

But at the same time, 25% is consumed in other industrial sectors. And according to JP Morgan, in 2026 compared to 2025, this market segment for platinum consumption will grow by 10%. I'd also note the growth in investment demand for platinum. The

numbers are roughly like this. 2025 closed with about 372,000 oz consumed, while in 2026, an increase to 540,000 oz is expected. And that's actually a very significant increase in percentage terms.

And I also wouldn't forget about hydrogen energy. Yes, there's a low base effect for now, but nonetheless, it's a kind of option and generally an interesting additional bet on the sector.

For example, about 60 to 70,000 oz of platinum are currently consumed for hydrogen energy. Expectations are that this demand will roughly double in the near future.

But generally, you have to understand how fast technologies are developing today. If there's a breakthrough in this sector, it could all happen much faster and grow not by two times, but by four or five. What we're seeing now, I don't

know, in the market, everything related to artificial intelligence, well, you can't rule out the same for other technological sectors. So, if we put it all together, what do we see? In the platinum market, we see the stagnating supply, which is essentially flat

because of the problems in South Africa. We see three additional sources of demand for platinum that are structurally growing. And despite all that, tactically we see that in China, platinum is being actively bought in very significant volumes.

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Yes, Dima, well, from a fundamental standpoint, everything is clear. But nevertheless, the market has been ignoring platinum for several months now. So, what should serve as such a catalyst for everything to just suddenly turn around in an instant?

Well, actually, the market isn't just ignoring platinum, it's ignoring all precious metals. And in our opinion, the key catalyst for platinum's growth will be a reversal in gold.

And as we've said repeatedly and recorded several videos, we are very bullish on gold in the medium to long term. So, as soon as gold starts to bounce back, investors will also remember platinum.

And for us, the immediate target is $2,400, which is about plus 20 to 23% from current levels, and then to previous highs, which is about 50% growth from the prices we see on the monitors now.

Well, okay, Dima, what's your opinion, right? We're discussing platinum and palladium. In this whole situation, will the gap between them continue to grow?

Yes, we believe the gap between platinum and palladium will only increase. But I would separately note that if gold and silver start to grow, then most likely palladium will also grow despite its weaker fundamentals. Nevertheless, if we talk about the price difference,

currently it's about $500 to $600. But according to JP Morgan forecasts, this difference will grow to $800 to $900 in the medium term precisely because of the different fundamental prospects of these metals.

Well, you, Dima, are probably talking more about a positive scenario. And what are the risks here? What could go wrong?

The key risk here is that platinum, palladium, and silver are essentially industrial metals, whose consumption is largely, and in some cases almost entirely, dependent on the overall situation in the industrial sector.

This means that their demand is closely tied to economic growth rates. If, for example, we assume the situation with Iran escalates further, it will lead to an even greater increase in energy costs and accordingly, at some point, the risk of a recession in the

global economy will increase significantly. And then all the flows that were previously directed into precious metals will completely go into gold. Because gold is the key hedge against such a scenario, against the risk of a recession.

And then, of course, everything related to industry will suffer and will be under pressure.

But this is still not the base case scenario. Our base case is that we'll see de-escalation in the near term, and we're seeing it now, and assets have already started pricing it in, at least the stock market.

Right? And then energy prices will decrease and inflation expectations will go down. Uh the monetary policy that investors expect in the near future, and we're saying that essentially over a year, investors expect a US interest rate hike, all these expectations will

change and they'll slowly start pricing in rate cuts, meaning monetary easing. This will lead to further depreciation of the US dollar, and all this together will lead to increased demand for metals, including platinum, gold, and silver.

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So, Dima, if we sum it all up, this correction that took place is not a reason to sell, but on the contrary, a good moment for portfolio rebalancing.

Yes, exactly. And actually, while all investor attention is focused on gold and silver, many are ignoring the platinum market. And here, a very cool opportunity is forming to build a position to participate in future growth, which could reach very

significant levels, up to 50% in our opinion, quite easily. If you want to understand how you can integrate platinum and other metals into your investment portfolio, sign up for a free session with a Beta Capital analysts and we'll review your portfolio in detail

and suggest rebalancing options. [music]