A very polite—but very firm—industry insider wrote in to tell me I made several mistakes in my recent bearish article on platinum. After checking with independent sources, it does seem that I was misinformed.
My polite critic also told me that in the years since the switch to palladium, a lot of R&D has advanced the effectiveness of palladium-based devices. That work has not been done with platinum. Due to differences in the metals, even if this R&D were duplicated, platinum may still not be as effective. I wasn’t able to verify this yet with independent sources, but it makes sense to me.
Similarly, the case was made that the cost of the platinum or palladium per car is quite small—not a major factor compared to the consequences of failing to meet ever more stringent emissions standards around the world. This too makes sense to me.
In sum, it may be that no matter how long palladium prices remain above platinum prices, the auto industry may never switch back to platinum to any significant degree.
If so, palladium prices may well remain above platinum prices until the internal combustion engine disappears from our roads.
But that doesn’t mean palladium prices have to go higher—or even stay at current levels.
Independent industry analysts like Johnson Matthey are calling for palladium supply deficits to persist this year. But they also say that recycling is increasing—and no one really knows how much palladium Russia produced during Soviet times is still coming to market. I don’t think we’re at the point where the auto industry is scrambling for supply.
What impact does all this have on my outlook?
One more thing…
I didn’t just make up the things I wrote before. I was going on information from a source I trusted. But it’s my responsibility to check the facts in what I write, and I failed in this case.
Thursday, April 4, 3:01pm, EDT, 2019