Precious metals traders and many market participants once called platinum, the rare precious metal, "rich person's gold." From the 1970s through 2010, platinum had commanded a significant premium over gold

Platinum prices (XPTUSD:CUR) reached its all-time high in 2008 at $2,308.80 and have not eclipsed the $2,000 level since that year. Platinum has not traded above $1,500 per ounce since 2014 and has spent nearly a decade trading around the $1,000 level. At the end of Q2 2024, the price was just below the $1,000 price pivot point.

Palladium prices (XPDUSD:CUR), meanwhile, exploded to a record $3,380.50 high in March 2022 when Russia invaded Ukraine. Russia and South Africa are the leading palladium-producing countries, supplying over 77.5% of the world's mine supplies. In 2023, out of 210 metric tons of output, Russia produced 92 tons, while South Africa's production was 71 tons. Meanwhile, palladium prices have plunged since March 2022 to below one-third the price at the high, with palladium closing Q2 2024 at under $1,000 per ounce.

The Sprott Physical Platinum and Palladium Trust (NYSEARCA:SPPP) invests nearly all its assets in physical platinum and palladium.

Palladium remained under pressure in Q2 2024

After reaching the record March 2022 high, NYMEX palladium futures reached lower lows in seven of the last nine quarters. While the precious and industrial metals did not make a lower low in Q2 2024, the price moved to the downside in the quarter that ended last week.

The monthly chart highlights Palladium's bearish that closed Q2 with a 4.27% loss and was 11.85% lower over the first half of 2024. Palladium posted an over 38% decline in 2023. Active month NYMEX September palladium futures were higher at the $1,019 per ounce level on July 2.

Platinum recovered, but the price is going nowhere fast

Platinum futures rallied 10.38% in Q2 and eked out a 0.69% gain over the first six months of 2024. However, platinum moved 7.33% lower in 2023.

The monthly chart shows that on July 2, nearby October NYMEX platinum futures were just over the $1,000 per ounce level.

Platinum and palladium were straddling the $1,000 level. While platinum was in a sideways trend, palladium's path of the least resistance remained bearish.

Gold and silver are in bull markets, leaving PGMs in the dust

While platinum was going nowhere in Q2, and palladium continued its descent, silver (XAGUSD:CUR) rose to its highest price since December 2012, and gold (XAUUSD:CUR) reached a record peak.

The chart highlights gold's rise to $2,435.80 per ounce in May. Gold gained 5.51% in Q2 and was 12.93% higher over the first two quarters. Moreover, every dip in gold since the 1999 $252.50 bottom has been a buying opportunity.

Silver broke through a technical resistance level, rising to a $32.50 per ounce high in May, the highest price in nearly a dozen years. Silver futures rallied 17.34% in Q2 and were 21.39% higher over the first half of this year. It has led the precious metals sector on the upside in Q2 and 2024.

Q2 was a tale of differing price action for precious metals, with gold and silver rallies and bearish and sideways PGM trends as platinum and palladium continued to search for bottoms. While palladium's price continued to melt, platinum went nowhere fast.

The case for platinum group metals over the coming months and years

From an investor's perspective, PGMs have been the dogs of the precious metals sector, but, as Shakespeare wrote in Hamlet, "The cat will meow, and the dog will have his day."

The following factors contribute to an eventual bullish recovery in the platinum and palladium futures markets:

• Platinum and, to a greater extent, palladium are far less liquid than gold and silver. They have lower daily trading volumes and open interest, the total number of open long and short positions in the futures market. Less liquid markets tend to be more volatile. When platinum and palladium prices turn higher, offers to sell could evaporate, exacerbating price appreciation.
• Russia is the leading palladium producer and the second-top platinum-producing country. As the war in Ukraine continues and relations with the U.S. and Europe deteriorate, tariffs, sanctions, and trade barriers could impact supplies and prices.
• Platinum and palladium have a myriad of industrial applications, from green energy initiatives to electronics. Supply shortages could develop as global demand increases over the coming years.
• Platinum and palladium are also investment metals. While their performance has lagged gold and silver, the higher the leading precious metals, the more investment demand could flow to the PGMs.

Bear markets can cause commodities to fall to illogical, unreasonable, and irrational levels that defy supply and demand fundamentals and frustrate the most patient investors. However, they will eventually reach unsustainable bottoms and reverse to the upside. Global inflation has increased production costs, which puts upside pressure on prices.

SPPP owns physical platinum and palladium and provides exposure in standard stock market accounts

The physical market for bars and coins is the most direct route for a platinum or palladium investment. However, the rare platinum group metals tend to command significant premiums, adding to costs. NYMEX platinum and palladium futures have physical delivery mechanisms but involve leverage because of margin requirements. Moreover, periodic illiquidity in these markets makes them challenging for even the most experienced market participants.

The fund profile for the Sprott Physical Platinum and Palladium Trust states:

SPPP's most recent top holdings include:

At $9.97 per share, SPPP had $143.34 million in assets under management. SPPP trades an average of 194,131 shares daily and charges a 1.07% management fee, according to the Sprott website.

As the chart illustrates, SPPP has been trading since late 2012. The physical ETF reached a $21.59 high in May 2021 when NYMEX platinum prices peaked at $1,281.40 and palladium reached a $3,109 high. SPPP rose to a lower $21.05 high in March 2022 when palladium traded to a record $3,380.50 peak, and platinum reached a lower $1,197 high.

SPPP is under half the level at the 2021 and 2022 highs and could be on sale at under $10 per share. The physical ETF is an excellent tool for exposure to the leading platinum group metals that could benefit from limited liquidity over the coming years.