By Geena Paul
MUMBAI (Commodity Online): What is the difference between Gold and palladium-platinum? Gold thrives on doom while palladium-platinum always ride boom wave.

Yes, Palladium and Platinum are industrial metals which will always show upward trend when the global economy is on a high and when automobile sector is showing rise in sales.

Palladium has a variety of uses, ranging from water treatment and oil refining to cancer treatment and dental work. It’s probably best known for its use as a catalyst in catalytic converters to reduce automotive emissions. Platinum is also used in high end cars as a catalyst in catalytic converters. Whereas gold prices always show a tendency to go up when there is uncertainty in the market and people rush to buy the safe haven metal. Gold is a safe bet for them not the best bet.

World events analysis and how they affect Markets

So, at a time when global economy is recovering fast, gold is showing a tendency to fall while platinum and palladium are in a high. And, in the months to come platinum and palladium will be the best bet for you.

Over the past year the price of palladium has risen from a low of $214 to its current price of about $477. It’s currently more than $100 off a five-year high established in early 2008, and there’s every reason to expect the price to move higher as the global economic recovery gains steam.

Palladium also reflects the health of automobile manufacturers because more than half of the annual production is used in the production of catalytic converters.

Platinum is even rarer than gold — last year only about 6 million ounces of platinum were mined versus almost 65 million ounces of the yellow metal — and has the additional benefit of being used in a variety of industrial applications. Like palladium, platinum is a key component in catalytic converters as well as electronics such as LCD televisions and computers. Given its industrial uses the metal tends to lag gold when fear is running high, but prices tend to recover much more quickly when the economy is on the mend.

Platinum isn’t as effective a hedge against tough economic times, but it is an excellent play on a continued recovery.

ETFS Physical Palladium Shares and ETFS Physical Platinum Shares are the only physical bullion funds dedicated to the two metals, both of which are excellent ways to bet on improving global economic health. Both funds are also quite liquid with tight spreads despite being recent market entrants, a clear demonstration of investor demand.

Platinum and its related metals such as palladium, iridium, rhodium, osmium and ruthenium are part of the precious metals group called Platinum group metals or PGM. They have similar chemical and physical properties and are found at the same ore deposits around the globe.

With the global recession, the price of platinum tanked by 66% to $774 an ounce from early 2008 highs of $2,250/ounce. It is still 40% off its high and the fundamentals are more compelling today than a few years ago. And, analysts say platinum prices will go beyond $1,900/ounce in a couple of years.

Every traditional internal combustion engine has a catalytic converter and new vehicles being manufactured have even tougher emission regulations, requiring more platinum content.

Vehicle demand tanked during this recent recession and platinum prices followed suit. Now the world is witnessing a turnaround in global vehicle sales.

And China, which recently beat the US to be the largest car market, is growing rapidly.

Overall increased global concern about the environment and emissions means increased penetration of platinum as more manufacturers and refineries adopt their products and technologies. This is particularly true in emerging markets such as China where pollution and smog is a serious problem.

Platinum is commonly used in jewellery given its rarity, durability and polish. About 20% of platinum’s end use is in jewellery.

China and India represent about 8-9% of the global gem and jewelry sales, or roughly $5 billion — and have the fastest growth rates. The total market should grow at over 5% for the next few years and will be a $250 billion market by 2015 compared to $146 billion in 2005.

South Africa and Russia represent over 90% of all PGM production supplies as there are very few ore deposits around the world. Most are in South Africa, then in Siberia. There are also mines in Montana and in Ontario, Canada.

And Russia (25% of total supplies) has the only surplus supply. As a strategic and national security move years ago, Russia accumulated excess platinum surplus.

These Russian stockpiles had created a mild supply overhang for platinum. The Russian government had been slowly unwinding and reducing this supply surplus. The key point is that industry experts believe Russia is running out of its surplus. If ever confirmed that would be quite a bullish indicator, said a report appeared in Mineweb.

With these clear indications, it is certain that every investor should now look for platinum and Palladium instead of the traditional gold, which will very soon see some slump.

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