Speculators are starting to place bets on a recovery in the price of platinum in the belief that car makers will be forced to switch from high-priced palladium used in exhaust-gas emission control systems.

The two metals once traded at a similar price, and fulfill a similar function.

But a wide gap has opened over the past three years as demand for platinum, which is the preferred catalyst in diesel engines, collapsed after Volkswagen was found to have rigged diesel-emissions testing equipment.

Palladium, which is the preferred metal in gasoline engines, has soared from around $930 an ounce when the Volkswagen scandal broke to a latest price of $1522/oz.

Cheaper Than Gold

Platinum has fallen over the same time from $940/oz to $840/oz, widening a gap with another precious metal that used to be cheaper, gold, which is currently trading at $1286/oz.

Historically, whenever a significant gap developed between platinum and palladium car makers switched to the cheaper metal because both act as catalysts in converting noxious gases such as carbon monoxide and nitrous oxide into less toxic compounds.

Five and ten gram platinum bars. Photographer: Kerem Uzel/Bloomberg Bloomberg

Knowing which metal to buy for catalytic converters has been complicated by politics with Russia being the major supplier of palladium and South Africa the major supplier of platinum.

Dieselgate Hit Platinum Hard


Of the two metals, platinum is more abundantly available but when sales of diesel…