Platinum ETFs Outshining Gold & Silver in 1H2025: Here's Why the Rally Could Extend in 2H

Platinum has surged 40% year-to-date in 2025, outperforming gold (up 30%) and silver (up 26%) as structural supply deficits and industrial demand fuel a historic bull run. The abrdn Physical Platinum Shares ETF (PPLT) has captured this momentum, rising 40% YTD, and is poised to lead further gains in the second half of the year. Here's why platinum's rally isn't over—and why investors should consider PPLT as a top play.

The Supply Crisis: South Africa's Struggles Fuel Platinum's Scarcity

Platinum's surge is rooted in a supply crunch, with South Africa—the source of 80% of global platinum production—struggling to keep pace with demand. Aging mines, labor disputes, and chronic electricity shortages (load-shedding) have constrained output, even as prices hit a four-year high of $1,330/oz in June.

The World Platinum Investment Council (WPIC) forecasts a third consecutive year of supply deficits, with 2025's shortfall projected to hit 966,000 ounces. This is no minor dip: the deficit now exceeds 2% of annual global supply, a level not seen since the 2000s.

Undervalued Relative to Gold: A Historical Discount with Momentum

Platinum trades at a steep discount to gold despite its industrial and investment appeal. At $1,300/oz, platinum is valued at just 60% of gold's $2,150/oz price, even though its supply is far more constrained (South Africa's 80% dominance vs. gold's global production).

This discount is unsustainable. Platinum's lease rates—a key indicator of physical scarcity—have spiked to 13.5% annualized, compared to gold's flat rates. High lease rates signal a shortage of physical metal for borrowing, a bullish sign.

Demand Catalysts: The Hydrogen Economy and Auto Sector Drive Growth

Platinum's role in the clean energy transition is accelerating its demand. Key drivers include:

1. Hydrogen Fuel Cells: Platinum is the catalyst of choice for fuel cells in zero-emission vehicles and industrial applications. Sibanye-Stillwater estimates platinum demand from this sector could hit 1 million ounces/year by 2030, up from negligible levels today.
2. Automotive Catalytic Converters: Stricter emissions standards (e.g., Euro 7's 50% NOx reduction by 杧 2026) require higher platinum loadings in catalytic converters. China's luxury car market, rebounding strongly, has driven a 50% surge in platinum imports in 2024.
3. Investment Demand: Institutional investors are rotating into platinum as gold's gains flatten. PPLT, the largest platinum ETF, saw $500 million inflows in Q2 2025 alone, a sign of confidence in its fundamentals.

Why PPLT is the Top Play

The abrdn Physical Platinum Shares ETF (PPLT) is the most liquid way to access platinum's upside. Key advantages:
- Liquidity: PPLT holds $1.2 billion in assets under management, ensuring low tracking error and ease of entry/exit.
- Direct Exposure: The ETF tracks platinum's spot price via physical metal stored in secure vaults, avoiding the dilution of mining equities.
- Bull Market Momentum: PPLT's YTD gain of 40% outpaces gold ETFs like GLD (up 30%), and its volume has surged as institutional investors rotate into platinum.

Risks and Caution Flags

• Volatility: Platinum's small market size and geopolitical risks (e.g., sanctions on Russian palladium producers) could cause short-term swings. The metal's 30-day volatility index (22) is higher than gold's (18).
• Overbought Conditions: Platinum's RSI hit 83 in June, a level historically signaling “blow-off” tops. However, fundamentals justify this rally: deficits are structural, not cyclical.

Conclusion: Platinum's Bull Case is Strong—PPLT is the Play

Platinum's 40% YTD surge is no fluke. Supply constraints in South Africa, rising industrial demand for hydrogen and auto catalysts, and platinum's valuation discount to gold all point to further gains. PPLT is the best vehicle to capture this momentum, offering direct exposure to a metal at the intersection of scarcity and clean energy growth.

Investment Strategy:
- Entry Point: Use dips below $30/share (PPLT) as buying opportunities.
- Target: Short-term upside to $40/share (reflecting platinum at $1,500/oz) and long-term gains to $50/share by 2026.
- Risk Management: Pair PPLT with gold ETFs for diversification, but prioritize platinum's structural tailwinds.

The second half of 2025 could see platinum challenge its 2008 record high of $2,290/oz. Investors who act now stand to profit from a once-in-a-decade opportunity.