Platinum is on a roll. Its dollar price is up nearly 35 percent year to date. It is now trading at around $1,240 per ounce, in no small part because investors in precious metals have watched the gold price soar for a while now and bet on gold’s shiny rivals moving up, too (silver is up roughly 20 percent in dollar terms over the same period). Platinum and silver have more industrial applications than gold. The price of platinum has (in part) been driven by a revival in demand for a product that central planners had consigned to the past. This was the main reason that platinum’s price fell so low. Even now it is trading roughly where it was in 2007.
In a recent article, the Daily Telegraph’s Jeremy Warner explains that most of the industrial demand for platinum comes from the metal’s use in catalytic converters. These are used to reduce polluting emissions from a traditional car’s exhaust. The catalyst inside the converter is often made out of platinum.
But traditional cars were done for, we were told, they were a “legacy” product, favored only by primitives who insisted on being unimpressed by electric vehicles (EVs), a class of cars so good that consumers had to be either bribed or “forced” to buy them.
“Compulsion,” writes Warner, “in any market is always a noxious concept, but it threatened to be entirely disastrous in autos; fining manufacturers for producing what consumers want was threatening to put many of them out of business.”
It was (and is) madness, but it may be that the technocrats — and the politicians who empowered them — are losing control.
Warner:
Despite the best efforts of policymakers to kill them off, petrol-fueled cars are experiencing something of a comeback in more environmentally acceptable, hybrid form. The market for traditional all petrol [gas] cars is also continuing to grow strongly in non OECD countries.
We’ll have to see how far Western policymakers will be prepared to go in watering down their EV mandates. In the U.S. Donald Trump is set on dismantling those put in place during what we must, I suppose — in the absence of a clear alternative — keep referring to as the Biden administration. These efforts have also extended to California’s notorious EV mandate, which has now effectively been revoked by Congress, although a legal battle lies ahead over the validity of that revocation.
But the demand for platinum is not only being upheld by consumer loyalty to old-school gas cars.
Warner:
The big growth market of the moment, however, is not in traditional gas guzzlers, but in plug-in hybrids, and given the pressures to make them as environmentally friendly as possible, these tend to consume even more platinum than retrofitted, pure internal combustion engine models.
Unfortunately, like many a religious or quasi-religious movement before them, climatists are consumed by a relentless quest for purity. This has meant that in Europe anyway (the U.S. took a somewhat more sensible approach) hybrids (even plug-ins), doomed by their carbon connection, were also destined for the junkyard. This was despite voices such as that of Toyota’s Akio Toyoda arguing (correctly) that there ought to be room for hybrids in any auto transition, a commonsense stance that got him into trouble with a number of ESG-crazed U.S. institutional investors.
Under the circumstances, it is unsurprising that Western companies spent comparatively little on investment in hybrids, a rare category of EV or quasi-EV (Tesla excepted) capable of attracting genuine consumer interest. The Chinese, facing no such official discouragement were not so shy.
Warner:
BYD’s “Dual Mode-Intelligence” technology, for instance, boasts both the highest thermal efficiency of any car ever produced and the greatest range at up to 2,300km…
Some [Western] manufacturers are already adjusting their production to give priority to hybrid models, so convinced are they that policymakers will eventually be forced to further ease back on production quotas in the face of inconvenient, market-led pressures.
If even half the claims made of BYD’s DM-i technology are true, then hybrids arguably have more to offer in terms of the practicalities of meeting climate change targets than EVs.
The shame of it is that it is Chinese manufacturers such as BYD that are making much of the running.
And the humiliation of it is that they were given their opportunity by the West’s climate policymakers, who are only now beginning to run into the pushback that they have so long deserved.