I. The Central Fact: A Deficit That Will Not Close
Platinum jumped 37 percent in the second quarter. Palladium gained 12. The deficits behind those moves are not the polite, passing shortfalls that pock most commodity cycles; they are structural, and they look set to widen as 2026 rolls on. In mid-2023 the World Platinum Investment Council pictured a 2024 platinum deficit of 530,000 ounces, a 2025 shortfall of 620,000 and a 2026 gap of 600,000. The latest report has those numbers at 990,000, 970,000 and 713,000 respectively — a revision that says more about the intractability of supply and demand than any single headline could.
Palladium has followed an even sharper script. The fall 2023 forecast called for a modest 106,000-ounce 2024 deficit and comfortable 487,000 and 897,000-ounce surpluses for 2025 and 2026. The actual 2024 figure came in at 624,000 ounces of deficit. The 2025 surplus has vanished, replaced by a 120,000-ounce shortfall. The 2026 surplus is now 125,000 ounces and shrinking. At this pace, it will not survive the next revision.
II. Analysis: Why the Forecasters Keep Being Wrong
South African mine output came in 130,000 ounces short in 2024 and is expected to miss by 435,000 and 245,000 ounces in 2025 and 2026. South Africa produces nearly three quarters of the world's platinum. The CEO of Valterra — the new name for Anglo American Platinum, just spun out from its longtime parent — told Bloomberg in July that today's price rebound is not enough to halt the decline, and that South African output could fall by as much as one-fifth by 2030. Recycled supply has been just as disappointing: 2024 fell short by 340,000 ounces, and the WPIC has since cut its 2025 and 2026 estimates by 260,000 and 170,000 ounces respectively.
Eighty-five percent of recycled platinum comes from scrapped auto-catalysts; the economics of the used-car market governs how much metal flows back. Used-car prices have surged again in 2025, likely spurred by Trump's tariff threats, keeping older vehicles on the road. A largely forgotten provision in the 2021 Infrastructure Investment and Jobs Act will require every new vehicle sold after 2026 to carry an alcohol-detection system. Many buyers will defer the new car. The recycled stream tightens further, and the deficit deepens.
III. Implications: Three Months of Cover, Then Two
Two consecutive years of platinum deficits running close to one million ounces — roughly twelve percent of world supply — have already eaten deeply into above-ground inventories. The 2025 deficit of 970,000 ounces, on WPIC numbers, will pull above-ground stocks down to 2.16 million ounces. That is three months of demand cover, a threshold that has historically triggered intense upward price pressure. With another large deficit forecast for 2026, inventories shrink to barely two months. Multiple price spikes through next year are, on the arithmetic, more likely than not.
Palladium tells the same story with a lag. Investment demand, which had been a rounding error in the palladium ledger, may be reawakening: investors accumulated close to 300,000 ounces in 2024, enough to make investment a major contributor to the year's 625,000-ounce deficit. The WPIC again projects near-zero investment buying for 2025. The flows into the Aberdeen Physical Palladium Trust suggest the bar has, once again, been set too low.
IV. The Position: A 75 Percent Discount to Gold That Cannot Last
From 1985 to 2005, platinum traded at a 200-dollar premium to gold, the natural reflection of its scarcity and its monetary appeal. The long bear market dissolved that premium, then inverted it, then deepened the inversion. By April 2025, platinum was trading 2,500 dollars an ounce below gold — a seventy-five percent discount to the metal it once outpriced. The gap has finally begun to draw investor interest, especially in China, and the move will accelerate if, as we expect, gold itself moves higher from here.
For European industrial buyers and the African producers who supply them, the implication is direct: the price of every catalytic converter, every hydrogen-electrolyser stack and every jewelry coin will be set by a market whose above-ground inventory has reached the level at which prices break upward. South African operators — Sibanye-Stillwater, Impala, the freshly spun Valterra — sit on the supply side of a deficit that cannot be closed by drilling. The bull market in PGMs has begun. It has the makings of one that will run for years.