Platinum, palladium beat gold!

 LONDON (Commodity Online): Even as the world is going ga-ga over the rising gold prices and investors are rushing to possess the yellow metal, there are some small precious metals which are making more profits than gold.

Platinum and palladium, two little known metals, have surged 38% and 56%, respectively, this year beating gold, which climbed by 12% only. Silver is up 42% over the same period.

Platinum and palladium are managing to profit from both jewellery and industrial sectors.

Both the metals have multitude of uses, with the auto industry taking about 60% of each metal’s annual production for catalysts to reduce tailpipe emissions.

Also the metals are a bet on economic recovery, and on the struggling automobile sector in particular.

However, despite cash for clunkers programmes announced by the US to buy gas guzzling cars and sell small cars, analysts still think auto makers’ demand for both metals will decrease this year.

Even with output likely to decline because vital South African mines are plagued with power shortages and labour disputes, both the platinum and palladium markets still confront the threat of a surplus.

One factor supporting prices is the growing appetite from exchange-traded funds that are backed by platinum and palladium.

As investors speculate on commodities, the total amount of the metals held by six such funds — traded in the UK, Switzerland and Australia — hit records last week, with about $1 billion in assets.

China may also have helped prop up the metals, with imports of platinum and palladium up 92% and 63%, respectively, in August from a year earlier, fueled by stronger demand from jewelers and auto makers.

Last year, Chinese jewelers and auto makers accounted for 16% of platinum’s global consumption. China’s jewellery demand for platinum is this year projected to exceed peak purchases seen in 2002, meaning a jump of 43% from last year. However, real demand growth isn’t strong enough to support such explosive imports, suggesting stockpiling..