Last year, the best performing metal was palladium which gained by more than 50% and platinum which gained by less than 1%.

Platinum and palladium are precious metals found mostly in South Africa and Russia. They belong to a group of metals known as platinoids. They are found deep inside the earth’s crust and they are mostly used in vehicle manufacturing in what is known as catalytic conversion because of their high density.

As precious metals, platinum and palladium are different from gold in that they are not used as a store of value. Instead, they have industrial uses. As a result, they tend to do well when the economy is doing well compared to gold which performs well during depressed times.

In the past few years, the spread between palladium and platinum has narrowed as manufacturers have moved to it because of its low price. But, these dynamics changed in the last quarter of the year when the price of palladium surpassed that of platinum as shown below.

So, the question is, will manufacturers continue to order the expensive palladium instead of the cheaper platinum?

Platinum futures bottomed on 13th December when the price fell to $872 per ounce and then started a rally that seems to be targeting the $954 level.