I have to start by saying that my experience in precious metals is somewhat limited, hence this is probably to be the shortest article of the series. However in the wider discussion on commodities skipping this would be a glaring (pun intended…) omission.
A shimmering cascade of history, a bedrock of modern industry, and a financial safe haven all rolled into one—that’s the captivating story of precious metals.
Ah and lest we forget…blinging and flexing. What would be rap, or footballers fashion, without a disporportionate amount of shiny bits?
However,beyond the simple glint and gleam, these commodities represent a microcosm of the global economy, driven by a complex interplay of human desire, technological innovation, and geopolitical forces. As we delve deeper into the market for gold, silver, and the catalytic crew(Platinum, Palladium and Rhodium), we uncover a world far more intricate and dynamic than it appears on the surface.
Gold: Humanity’s Favorite Shiny Thing Wars were fought over it, legends are born around it (El dorado, the N*zi gold…you name it). Gold’s relationship with humanity is a love affair that spans millennia. The ancient Egyptians called it the “flesh of the gods,” forging it into burial masks and jewelry. The Romans used it to back their currency, and alchemists spent lifetimes trying to create it from lead. Its chemical properties—it doesn’t tarnish, it’s incredibly dense, and it’s a fantastic conductor—made it the perfect material for both adornment and commerce. Today, gold’s roles are threefold: a monetary asset, an industrial component, and a cultural touchstone. Its dual nature as both a store of value and a commodity makes its market dynamics unique.
Silver: The Sidekick with Superpowers Silver’s story is one of dual identity. Historically, it was a close second to gold as a monetary metal, underpinning countless currencies and forming the basis for trade. But while gold’s role as a currency has largely faded, silver’s industrial superpower has come to the forefront. It is the most electrically and thermally conductive of all metals, making it an irreplaceable component in electronics, from smartphones to solar panels. The global shift towards a green economy is creating unprecedented demand for silver. Its price is therefore a fascinating hybrid, influenced by both the traditional financial drivers of a precious metal and the raw material needs of an industrial powerhouse. This has historically made silver more volatile than gold, offering a higher-risk, higher-reward proposition for savvy investors.
Platinum, Palladium, and the Catalytic Crew While gold and silver may be the stars of the show, the Platinum Group Metals (PGMs)—platinum, palladium, and rhodium—are the unsung heroes of the modern world. Their primary claim to fame lies in their extraordinary catalytic properties. They accelerate chemical reactions without being consumed themselves, making them indispensable in pollution control. Over 80% of palladium and a significant portion of platinum and rhodium demand comes from the automotive industry, where they are used in catalytic converters to clean up vehicle exhaust. The market for PGMs is a tale of two fortunes: for years, palladium’s price soared due to its heavy use in gasoline-powered vehicles, while platinum, more prevalent in diesel engines, lagged behind. This led to a significant price inversion. However, as the world pivots towards electric vehicles, the long-term outlook for PGMs in traditional auto manufacturing is in question, prompting the search for new applications, particularly in hydrogen fuel cells, which rely on platinum catalysts.
A Who’s Who of Precious Metals
Some people might still remember the Zurich’s gnomes. Which were very different from the garden variety. The british prime minister Harold Wilson invented the term as a derogative indication of the underground power of the Swiss bankers. And while Switzerland is still quite active in this arena, things are very different now. At least in Zurich. Secrecy is long gone, compliance officers probably outnumber deal makers and the “center of gravity” of the market has long moved away from the alps.
The global precious metals market is not just a free-for-all; it’s a highly structured ecosystem with a diverse cast of players, each with a specific role.
The Producers: The Mining Giants At the base of the supply chain are the mining companies. These are the giants of the industry, responsible for unearthing the metals. In the gold market, names like Newmont Corporation, Barrick Gold, and Agnico Eagle Mines dominate. For silver, key producers include Pan American Silver and Hecla Mining, while Mexico, Peru, and China lead the world in overall silver production. In the PGM space, South African companies like Anglo American Platinum, Impala Platinum, and Sibanye-Stillwater, as well as Russia’s Norilsk Nickel, are the heavyweights, controlling the majority of the world’s supply. These companies are not only influenced by market prices but also by operational challenges, labor disputes, and geopolitical risks in the countries where they operate.
The Central Banks and Financial Institutions The central banks of the world are the market’s ultimate sovereign players. They hold vast reserves of gold, not just as a historical artifact, but as a strategic asset to diversify reserves and provide a hedge against currency devaluation. The United States, Germany, and the International Monetary Fund (IMF) are among the largest gold holders. In recent years, central banks, particularly from countries like China and Russia, have become significant buyers, shifting the balance of power in the market.
which is kind of ironic considering most central banks have spent the last few decade after the collpase of the gold standard, inflating fiat currency to the moon and back.
Beyond central banks, a powerful network of bullion banks forms the financial heart of the precious metals market. These are institutions like JPMorgan Chase, HSBC, and UBS, which act as market makers. They facilitate the trading of physical and paper metals, provide financing for mining operations, and offer a range of services from vaulting to lending. They are the liquidity providers, ensuring that there’s always a buyer and a seller for large-scale transactions.
The Intermediaries and End Users The physical metals journey from the mine to the end consumer often passes through refiners and bullion dealers. Companies like PAMP and Valcambi in Switzerland are renowned refiners that transform raw ore into highly pure bullion bars and coins. Bullion dealers, such as APMEX and JM Bullion, serve as the retail interface, selling physical metals to individual investors and collectors.
On the other side of the equation are the end users. This includes jewelry manufacturers, industrial companies (electronics, automotive, dentistry), and sovereign mints that produce coins for investment and circulation. The demand from these users is a fundamental driver of the market. For instance, China and India are the world’s largest consumers of gold for jewelry and cultural purposes, making their economic health and consumer habits a key factor for the gold market.
The Investment Community: The “New” Frontier Investors seem to fall in love with precious metals every few decades or so. Except so called “gold bugs” who are fixed on gold and are as intresting to listen to as your deranged uncle, the appetite for precious metals is quite cyclical. However the rise the “paper market” has created a new set of crucial players: the investment community. This includes everything from individual retail investors buying into Exchange-Traded Funds (ETFs) like the SPDR Gold Shares (GLD) and the iShares Silver Trust (SLV), to massive institutional hedge funds and pension funds that trade futures and options on exchanges like the COMEX. These financial instruments allow investors to gain exposure to the price of a precious metal without the logistical complexities of physical ownership. This has dramatically increased the size and liquidity of the market, but it has also introduced a layer of financialization that can sometimes disconnect prices from physical supply and demand.
Given the global nature of this market, a robust regulatory framework is essential to ensure transparency and prevent manipulation. The London Bullion Market Association (LBMA) is the unofficial global standard-setter, overseeing the “Good Delivery” list of refiners whose bars are trusted for trading. The LBMA also mandates strict due diligence on sourcing to prevent the trade of “conflict metals.” Similarly, the London Platinum and Palladium Market (LPPM) provides similar oversight for the PGM market. At a national level, financial regulators like the U.S. Commodity Futures Trading Commission (CFTC) police the futures markets to prevent fraud and manipulation, while international bodies like the OECD provide guidance on responsible supply chains.
the Last 24 Months: A Volatile Journey.
volatility, like greed, is good. I eman is good for traders. For users and producers not so muhc, and that is a bit the standard of commodity markets: traders thrive on volatility, users on low prices, producers on high prices. the latter are obvious, the first not so much. We will delve further in the concept of volatility on a specfic episode of the ABC. The last two years have been a tumultuous period for precious metals, a testament to their role as economic barometers.
The Gold Rush: A Resilient Safe Haven Gold’s performance has been a masterclass in its safe-haven credentials. As inflation soared and global debt levels reached historic highs, the purchasing power of fiat currencies was a major concern for investors. Gold’s rally, pushing prices to new all-time nominal highs, was a direct reflection of this sentiment. It was a classic flight to quality. The most significant driver, however, was unprecedented central bank demand. Countries like China, Russia, and India have been steadily accumulating gold to reduce their reliance on the U.S. dollar, a trend that is expected to continue. However lest we frorget, Gold has been a long streak of disappointments for the last 3 decades. It is still not an investment for the casual passer-by
Silver’s Shine: A Tale of Two Markets Silver’s journey has been more of a roller coaster. Initially, it lagged gold’s performance, but as industrial demand from the solar and electronics sectors accelerated, its price surged. The transition to a green economy is not a future prospect; it is happening now, and silver is a critical ingredient. This industrial appetite, coupled with strong investment demand from both retail and institutional players, has created a structural supply deficit in the physical market. Reports from bodies like the Silver Institute have highlighted this gap, creating a powerful narrative for silver bulls.
PGMs: Navigating the Automotive Transition The PGM market has been the most complex. The global push for cleaner air, particularly in China and Europe, drove record demand for catalytic converters, pushing palladium prices to extreme highs. This led to a significant premium over platinum, its cheaper counterpart. As a result, automakers have been actively working to substitute platinum for palladium, a trend that has narrowed the price gap and brought palladium’s price back down to more sustainable levels. The long-term challenge for both metals remains the global pivot towards electric vehicles, which do not use catalytic converters. However, the emerging hydrogen economy, where platinum is a key catalyst in fuel cells, presents a potential new source of long-term demand.
Where the Consensus Sees the Markets Going Bear in mind: this is NOT investment advice, it’s just my opinion and if you lose money on the market I am sorry but it is your problem and your problem only. Just disclaiming eh..
The future of precious metals is not written in stone(again pun defintiely intended), but the consensus view among analysts and market experts points to continued strength, albeit with nuances for each metal.
GoldThe outlook for gold remains bullish. While a potential global economic slowdown might dampen jewelry demand, the primary drivers—geopolitical instability, inflation concerns, and persistent central bank buying—are expected to keep prices well-supported. Many analysts believe gold will continue its upward trajectory, potentially testing new record highs. Gold is expected to remain a core component of a diversified portfolio, a timeless hedge against uncertainty.
Silver For silver, the consensus is overwhelmingly positive. The long-term bullish case for silver is not just about its role as a monetary metal but its irreplaceable function in the green energy transition. As solar panel deployment accelerates globally, and as silver is increasingly used in electric vehicles and 5G technology, the industrial demand is set to grow exponentially. With supply facing structural constraints, many analysts predict a continued re-rating of silver, with its price potentially outperforming gold in the coming years and a tightening of the gold-to-silver ratio.
PGMs The outlook for platinum and palladium is more mixed but not without promise. While the specter of the EV transition hangs over the market, the short-term demand for catalytic converters remains robust. For palladium, the consensus is that the market has found a new equilibrium after its price correction, but its long-term future will be dependent on how fast the world adopts EVs and if new technologies can be developed to replace it. For platinum, the future looks brighter. Its lower price relative to palladium makes it an attractive substitute, and its role as a key component in the nascent hydrogen fuel cell industry offers a compelling new growth story. The consensus is that platinum is the PGM with the most promising long-term prospects
so this is the end of chapter 1. Hope you like it (and if you don’t I guess you get what you pay for)
Chainergy 
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