Think petrol-powered cars are dead? Tell that to investors

Telegraph

14-06-2025

As you would expect, the price of gold surged anew alongside that of oil after Israel launched a wave of attacks on Iran. Rising global instability is meat and drink for gold bugs; there's nothing they like more than the sight of fighter jets on the move.
But hold on, what's this? Prices are also surging in that largely forgotten corner of the precious metals markets, platinum, and it's got very little to do with Iranian ambitions for a nuclear bomb.
Rather, it is the growing conviction that there is life after apparent death for the internal combustion engine (ICE). Despite the best efforts of policymakers to kill them off, petrol-fuelled cars are experiencing something of a comeback in more environmentally acceptable, hybrid form. The market for traditional all petrol cars is also continuing to grow strongly in non OECD countries.
What's that got to do with the price of platinum? Though not nearly as widely held as gold, the metal enjoys some of the same characteristics, in that it is extensively used in jewellery and there is steady, if unspectacular, investment demand for it.
But it has historically failed to command the same totemic status as gold as an alternative form of money, or as insurance against collapse in the global monetary order – a tail risk that seems to grow bigger by the day.
On the other hand, it does have an industrial use, catalytic converters, and that's where the lion's share of the demand comes from. These convert harmful emissions from ICE vehicles into less harmful ones.
When Western governments announced timelines for going all electric, it was therefore widely assumed that this also sounded the death knell for platinum.
Once upon a time, the metal enjoyed near price parity with gold, but over the past decade, it has lagged ever further behind, and now stands at close to a record discount of more than $2,000 (£1,474) per ounce.
Corecam, a Zurich-based wealth management firm, thinks it has spotted an opportunity. In recent analysis, the firm points out that platinum prices are now near or below the cost of production for many South African miners, where 80pc of the global platinum supply originates.
Most producers are struggling to break even, a predicament that historically marks the cyclical bottom in commodity markets. Hardly any investment has flowed into new sources of platinum production in recent years.
Now consider the following. Despite the incentives offered, EVs have failed to achieve the market penetration expected of them. Range limitation, basic lack of charging point infrastructure, and of course still relatively high prices have been a turn-off for consumers.