Platinum and palladium have very similar chemical and physical properties, and because platinum has remained roughly 3 to 4 times more expensive since 2004, palladium is being used increasingly often as a substitute. Over the past three years, 76.5% of platinum supplies were provided by South African mines (nearly all of that comes from the enormous Bushveld Complex). In the same time frame, 84.4% of palladium supplies came from Russia and South Africa alone. Accordingly, sociopolitical and economic circumstances of both nations have drastic effects on platinum and palladium markets. While these metals tend to maintain high-price correlation given stable supplies, a supply shock can cause decoupling. A Russian supply crisis during the late 1990s, for instance, caused palladium prices to climb nearly 50% higher than platinum and exhibit a negative 0.80 correlation from 2002-03.

On the demand side, a disturbance in automotive production could have similarly dramatic consequences. Those committed to exposure to either metal for their auto-industry applications may find platinum the safer bet. Though palladium is a cheaper substitute, manufacturers have not cut platinum use outright. To a great extent, palladium, and even silver, is being used alongside platinum in catalyst mixes. The dilution of the mixtures is part of an ongoing effort to curb costs while meeting increasingly stringent emissions requirements. In addition, jewelry's share of platinum's total demand is comparable to its autocatalytic demand. Thus, if an investment in platinum is driven into the red by falling auto production, cheaper platinum prices will encourage discretionary spending on platinum jewelry and curb losses to an extent Full Article