Rarity does not mean premium pricing

OVER the past year and even year-to-date, one of the best-performing asset classes has been gold. Although the asset provides no tangible income in terms of yield, the price of gold futures’ continuous contract measured in US dollars is up 42.5% year-on-year and 28.2% year-to-date and was last seen at US$3,383 per ounce.

Even removing the weakness of the greenback, which is down by 8.8% since the start of the year, gold has appreciated by almost 20% this year.

The two main reasons for the surge in gold price over the past year are the diversification strategies of most central banks as they move away from dollar-based assets like US Treasuries.

The flight to safety too is attracting attention to gold as the world enters one crisis after another. The latest is of course the Israel-Iran war. Then, there’s the world’s anxious wait for Trump’s impending final reciprocal tariff rates.

Even silver has performed well with the price rising by 24% year-to-date and 18% over the past year. The gains for other precious metals have been strong too.

Palladium has risen 15% year-to-date and 17.2% from a year ago. Platinum has also performed well, increasing by over 40% year-to-date, up 30% from a year ago, and gaining nearly 19% in the past month alone.

While platinum is playing catch-up with gold, the gains by palladium and silver compared to gold have not been as impressive. Why so? After all, platinum and palladium are rarer and more precious than gold and at one time in history, used to trade at a premium to gold!

Jewellery

Gold and silver are well-known and commonly used in jewellery. They also find applications in dentistry, industrial processes, and as a store of value and medium of exchange.

However, not much is known about the other two precious metals – palladium and platinum. While platinum has gained some recognition in jewellery production, palladium remains relatively less recognised.

Platinum usage for jewellery has decreased compared to previous years, while demand in the automotive sector and industrial applications has grown.

As an investment, platinum has seen a decline, likely because of liquidation by asset holders due to its under-performance and limited liquidity. On the other hand, palladium, commonly used in catalytic converters for diesel cars, is also found in white gold alloys and various industrial applications.

Production

When it comes to annual production, silver leads the way among precious metals, with over 30,000 tonnes produced yearly, valued at around US$35bil. Gold follows, with 3,700 tonnes produced annually, worth approximately US$400bil at current prices.

Palladium and platinum are much rarer, with annual outputs of 290 tonnes and 230 tonnes, respectively, each valued at just under US$10bil. Together, these four precious metals contribute more than US$450bil annually to today’s production value.

Unprecedented performance

Gold has outperformed platinum and palladium in price. It became the top precious metal over 14 years ago, although the price difference between gold and platinum fluctuated until gold broke away 10 years ago. Its relationship with palladium, however, is inconsistent.

Palladium initially gained popularity as a cheaper alternative for industrial use. Its demand surged due to environmental concerns, particularly in catalytic converters, as carmakers prioritised meeting stricter regulations, especially from the European Union.

By October 2017, palladium surpassed platinum in price, and 15 months later, it even exceeded gold, reaching a peak of nearly US$3,000 per troy ounce in April 2021 and March 2022 before experiencing a sharp decline.

Today, palladium trades just above US$1,000, while platinum is at US$1,280, making it much cheaper than gold. Metal prices depend on demand and supply, with rare metals more valuable.

Palladium and platinum are 30 times and 15 to 20 times rarer than gold respectively based on annual mining production. However, their prices are now at a steep discount to gold.

Could this be the turning point for these lesser-known metals> Will platinum and palladium finally outshine gold’s recent dominance?

Central banks

Gold is highly sought after, especially by central banks diversifying away from US Treasury holdings. However, platinum and palladium have less appeal due to lower liquidity, despite being rare.

According to the World Gold Council (WGC), central banks purchased 244 tonnes of gold in the first quarter of 2025, adding to the 1,045 tonnes bought last year. A WGC survey revealed that 95% of central banks expect gold reserves to rise in the next 12 months, with 43% planning to increase their holdings.

This trend is expected to continue, as gold remains a preferred safe-haven asset over the struggling dollar. Central banks are bolstering their reserves, absorbing about one-third of annual gold production.