MICHAEL AVERY: Gold and PGMs at a crossroads

In Oscar Wilde’s The Happy Prince the story’s protagonist bemoans: “The living always think that gold can make them happy.”

Gold, that ancient trickster, is at it again, doing what it does best — dazzling the frightened, wooing the wary, and making central bankers sweat through their pinstriped suits. Investors don’t trust politicians. Politicians don’t trust each other. Investors don’t trust fiat. And nobody trusts the future. So here we are, five record highs into 2025, and the gold is still climbing like a cat up a tree with a pack of rabid dogs below. 

Last year gold gained more than 40%, a manic sprint. Now, even a strong dollar and high yields can’t slow it down. The latest jolt? Rumours that Trump might slap tariffs on the metal (because of course he might), sending demand for physical gold in London surging as traders scramble to get their bars into the US before the taxman comes knocking. Gold futures are being flipped like new real estate investment trusts in the 2010s, with London Metal Exchange gold offloaded for Comex contracts as prices hover near $2,869 an ounce. 

And then there are the central banks. Speaking to me at Mining Indaba last week, the World Gold Council's John Reade put it bluntly: “If I were a central banker, I would be encouraged to buy more gold based on what’s happened in the past few weeks.” He wasn’t being cute. In 2024 alone central banks bought more than 1,000 tonnes for the third consecutive year. Why? Because the US and its allies froze Russia’s central bank assets, and suddenly every emerging market banker saw the writing on the vault door: if it’s in your hands, it’s yours. If it’s on a screen, it’s someone else’s decision. 

So, is gold still the play? Or should we be looking at platinum group metals (PGMs), the neglected stepchildren of the precious metals world now quietly clawing their way back into the spotlight?

Gold is already expensive, though Reade says that Western investors, who had been largely sitting on the sidelines, have only recently started returning, reversing years of exchange-trade fund outflows. If they pile in, gold could break $3,000 an ounce. The real question is whether central banks can maintain their relentless buying pace. 

For investors, gold remains an insurance policy. You buy it because you don’t trust governments, fiat currencies or financial markets. But at these levels don’t expect another 40% rally. As Reade put it: “Risk and uncertainty will support gold this year … but people shouldn’t bank on the kind of returns we saw in the past year or two.” 

Meanwhile, PGMs, the most hated metals now, might be the most mispriced. Platinum, palladium and rhodium have been through the wringer. Prices have whipsawed, collapsing under pressure from declining internal-combustion engine vehicle production and the supposed dominance of battery-electric vehicles (BEVs). But the tide is shifting. 

Sieberana Research MD René Hochreiter was refreshingly blunt in his assessment when I spoke to him recently. “I wouldn’t be in platinum right now. I’d rather be in gold for 2025. But by 2026, 2027? PGMs could surprise us.” 

Why? Because BEVs, once thought to be the end of the PGM market, are not taking over as fast as expected. In fact, Hochreiter highlighted a striking trend: while BEV sales grew just 10% last year, hybrid vehicle sales surged 30%. That’s crucial because hybrids still rely on catalytic converters, and catalytic converters need PGMs. 

“The consumers that would have bought a BEV are now looking at hybrids,” Hochreiter said. “Last year, hybrids increased by almost 30% in production and sales, while BEVs only increased about 10%. The hybrid is taking over from the electric vehicle.” 

This is a critical shift. For years PGM bears assumed BEVs would steadily eat away at platinum and palladium demand. But with hybrids gaining market share and the internal combustion engine proving more resilient than expected, PGM demand isn’t disappearing. 

Then there’s supply. SA and Russia account for more than 80% of global PGM production, yet prices remain under pressure. Normally, you’d expect a weaker rand to lead to mine closures and a supply squeeze. But thanks to the currency devaluation and strong by-product revenues from chromite, Hochreiter doesn’t see major cutbacks soon. 

“As long as the rand keeps falling, SA PGM producers will keep producing,” he said. “At R20 to the dollar, suddenly those mines that were on the brink of shutting down at R17 are making money again.” 

But that won’t last forever. If inflationary pressures push production costs higher, or if SA’s power crisis worsens, we could see real supply-side constraints, which could trigger a sharp rebound in prices. 

So, where should investors be looking? Gold’s case is clear. If you’re worried about geopolitical risk, inflation or another round of financial instability, it remains the ultimate safe haven. But at these record levels you’re not getting in at a discount. 

PGMs, on the other hand, are the more interesting long-term play. Short term, prices might still be under pressure, but the fundamentals are shifting. If BEV adoption continues to plateau and hybrids keep gaining ground, demand for platinum and palladium could stabilise, possibly even rise. 

Hochreiter offered a glimpse into where prices could go if supply constraints kick in: “By 2026/27, I think platinum and palladium could be back at $1,100—$1,200 an ounce, and rhodium could push back towards $5,000.” That’s a significant upside from levels now. 

For the short-term trader gold remains the safer bet. For the contrarian investor willing to look past 12 months, PGMs could be the undervalued gem hiding in plain sight. 

• Avery, a financial journalist and broadcaster, produces BDTV’s Business Watch. Contact him at Badger@businesslive.co.za.