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Platinum: A tale of two consumers
Platinum: A tale of two consumers
Summary
- Among platinum ’s diverse sources of demand, European and Chinese consumers remain the core drivers.
- Continuing rising incomes and a growing middle class could continue to benefit platinum jewellery demand in China.
- Tighter emission standards and strong auto sales may add further support to platinum demand in Europe.
Despite tepid growth and continued uncertainty, the global consumer has remained a resilient driving force in many economies. In the case of platinum, the continuation of healthy consumer spending will remain a critical driver for future demand, particularly among two consumer segments which have accounted for nearly 40% of average annual consumption.
Platinum demand is most often associated with the European automotive market, which accounts for 19% of average annual demand for use in catalytic converters for diesel passenger vehicles. What is less recognized is that over the last 5 years the largest contributor to demand (20%) has stemmed from another consumer segment – Chinese jewellery.
Platinum’s fate remains tied to Chinese jewellery and European auto demand
Average Annual Demand (2011-2015) by sector and region
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China’s growing middle class
Platinum jewellery fabrication in China fell approximately 8% last year with signs indicating this trend may persist throughout 2016. The jewellery sector in China has seen an overall slowdown in line with the country’s economic challenges. In response, consumers have tightened their belts, with the memory of last year’s equity market pullback still fresh and weighing on consumer sentiment. The Chinese jewellery industry has also struggled to operate in this economic backdrop as smaller fabricators have been driven out of the market while larger producers have downsized.
Recent changes in consumer preferences and spending habits have also impacted the platinum jewellery market. Last year saw consumer budgets shift to other discretionary purchases such as domestic travel and vacation expenditures. This was doubly impactful for the jewellery market as more consumers were traveling during holidays and foot traffic in jewellery stores fell during periods of traditionally high consumer spending.
China still remains a global growth engine with lots of pent up potential consumption
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Despite these challenges, there are several themes that lend support for the outlook of China’s platinum jewellery demand. China currently has the lowest consumption level relative to its gross domestic product (GDP) compared to the average emerging market economy and well below developed markets. Meanwhile, its share of global GDP was 17% at the end of 2015 and expected to reach nearly 20% by the end of 2021.
China will continue to play a key role in global growth in years to come as it continues to transition from an industrial to consumer driven economy supported by a growing middle class. As income per capita is expected to continue to rise in coming years, this may result in China moving higher up the “consumption ladder”. This would see marginal spending shift from consumer staples like food to consumer discretionary goods and services (like appliances and health care) and eventually reach higher levels of luxury goods.
Given China’s strong cultural taste for jewellery, higher spending capacity of a growing consumer base would likely see jewellery demand persist. China’s growing middle class consumer has already driven several themes which may continue to serve as a boon for platinum demand. While gold jewellery still comprises the bulk of demand, platinum jewellery in China has grown in popularity among younger consumers (millennials), which are a key and growing component of the middle class consumer market. Growing acceptance of platinum jewellery as gifts may be further supported by new product designs and promotions for platinum jewellery targeted at this segment during festivals such as Chinese Valentine’s Day. Additionally, expansion into new consumer markets among China’s third and fourth tier cities may further cement acceptance and expand platinum jewellery demand in the long run.
Tighter emission standards
Another key consumer segment for platinum stems from passenger vehicles in Europe. Platinum is a key component in autocatalysts for diesel engines, which due to tax advantages makes up the majority of the European passenger car fleet.
Despite Europe’s turbulent economy, growth is continuing to recover and consequently European light vehicle sales remain robust and continue to trend higher while overall retail sales in Europe have slumped so far this year. This spells good news for platinum since according to Thomson Reuters GFMS, 84% of European autocatalyst platinum demand in 2015 was used in the light diesel sector.
European car sales continue to trend higher despite slower overall consumer spending
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The Brexit vote appears to have weighed on car sales in July as European light vehicle sales fell 1.7% year over year and July new passenger car registrations fell 30% in the United Kingdom (UK) from the prior month. The full impact on European car sales emanating from Brexit remains uncertain, but July UK retail sales rose 5.9%, beating expectations, which may signal Brexit’s impact on the consumer was temporary. Overall, the European auto industry remains buoyant with improving employment and low financing costs may continue to entice consumers in other economies as well.
What should help soften any potential impact from Brexit on European car sales is the continued utilization of diesel engines and increased loadings of platinum used in diesel autocatalysts to meet higher emission and fuel efficiency standards. While diesel vehicles in Europe generally have lost market share in recent years to gasoline engines (which utilize palladium over platinum in autocatalysts), the introduction of the Euro 6 emission standards in 2015 helped offset this secular trend and may continue to positively impact platinum demand in years to come.
Eur0 6 put tougher limits on nitrogen oxide (NOx) emissions for automakers. While autocatalysts are not the primary technology to abate NOx emissions (lean NOx traps and selective catalytic reductions are used in the after-treatment for this purpose), according to Johnson Matthey, platinum can help optimize the process. Metals Focus estimates that this increased the average platinum loadings in catalysts by 10% in 2015 to compensate for the new emission standards, a trend likely to persist this year.
Going forward further reliance on diesel engines will remain a key component for automakers to meet European fuel efficiency targets. By applying the latest after treatments, diesel engines generate less pollution and offer better fuel efficiency than gasoline engines.
Investment Outlook
Platinum has risen 26% year to date as it has caught up to the strong year to date performance of its precious metal peers, gold and silver. Unlike gold and silver, which have seen a large influx of investor demand through exchange traded products (ETP) flows, platinum ETPs have seen slight net redemptions globally so far in 2016. The driver of platinum appears to be futures market contracts held by money managers. Should ETP investors also engage in buying platinum we could see the metal gain a second wind. In the long term, the fundamentals for platinum supply and demand remain constructive.
Speculative investors have driven the year to date rally in platinum so far
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For more information contact:
ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4330
E infoUK@etfsecurities.com
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Markets are moving fast and keeping up with what this means for your portfolio can be tough. VanEck’s Asset Allocation Committee recently gave an update on market trends and shared how these factors are shaping our core allocation models, the VanEck Wealth Builder Portfolios.
Watch the Webinar Replay Here
Key Highlights
• Gold typically outperforms during the second half of the inflation regime as investors seek protection from social, geopolitical, and financial instability.
• Bitcoin has been the best performing asset class in 8 out of the past 11 years and we strongly believe it deserves a place in investors’ strategic asset allocation.
• Semiconductor valuations have reset: It may be time to reengage after a major repricing since last summer.
• India is one of the most compelling structural growth stories in the market, and the recent India correction is a buying opportunity.
Gold is the Second Half Team (9:33)
Government spending accounts for a whopping one-third of U.S. GDP. Deep spending cuts will likely trigger a recession – which would increase U.S. deficits and cause more inflation. And the risk isn’t just inflation—it’s fragmentation. These cuts are happening amid a trade war, which makes everything more expensive, more uncertain, and more fragile.
This market backdrop, characterized by inflation, war, uncertainty and growing financial instability, is built for gold. Historical data shows that commodities outperform during the first half of the inflation regime, while gold typically outperforms during the second half of the inflation regime as investors seek protection from social, geopolitical and financial instability.
Dividing the Bull Market into Two Halves
Source: Bloomberg, VanEck. “Commodities” represented by the Bloomberg Commodity Index. Past performance is no guarantee of future results. Any projections, forecasts and other forward-looking statements are not indicative of actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice.
Bitcoin Deserves to be Owned (12:47)
Unlike traditional assets, Bitcoin is decentralized—not controlled by any single government or central bank. It is much more volatile than gold and should not be confused as a risk-off asset. Expect prices to remain under pressure in the near term. However, Bitcoin is well-positioned to rally in the future and continue its strong run of performance.
Bitcoin Has Been the Best Performing Asset Class in 8 Out of the Past 11 Years
Source: Morningstar. As of March 2025. “Bitcoin” represented by MVIS CryptoCompare Bitcoin Index; “US Equities” represented by S&P 500 Index; “Gold” represented by S&P GSCI Gold Spot; “EM Equity” represented by Fidelity Emerging Markets Index; “Real Estate” represented by the NASDAQ Global Real Estate Index; “US Bonds” represented by Bloomberg US Aggregate Bond USD; “Treasuries” represented by Bloomberg Aggregate Bond Treasury Index; “Commodities” represented by Bloomberg Commodity Index. Index definitions included at the end of this presentation. Digital assets are subject to significant risk and are not suitable for all investors. Not intended as an offer or recommendation to buy or sell any assets referenced herein. Past performance is not indicative of future results.
Finding Opportunity in the Chaos: Semiconductors and India (13:34)
Market volatility often triggers a flight to safety, but for astute investors, it can also open the door to compelling opportunities. When asset prices move sharply in response to fear, uncertainty, or liquidity pressures, dislocations can emerge—creating mispricings that don’t reflect underlying fundamentals. Two of our favorite areas are in semiconductors related to AI and India—as the U.S. economy slows, global stimulus efforts are accelerating elsewhere, and India remains a top conviction idea.
Comprehensive Model Portfolio Solutions: From Core to Thematic (17:32)
VanEck’s model portfolio solutions span from comprehensive asset allocation to thematic offerings. Our Wealth Builder Plus Portfolios provide core exposure to equities and fixed income with a strategic allocation to real and digital assets. Security selection, which marries the elements of both active and passive strategies, allows the portfolio to adapt to changing markets. Its systematic investment approach focuses on maximizing diversification and monitoring risk to optimize performance over the long term.
To learn more about market trends and portfolio positioning, listen to the full discussion here.
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Article authored by David Schassler
IMPORTANT DISCLOSURES
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the speaker(s), but not necessarily those of VanEck or its other employees.
The models are not mutual funds or other types of securities and will not be registered with the Securities and Exchange Commission as investment companies under the Investment Company Act of 1940, as amended, and no units or shares of the models will be registered under the Securities Act of 1933, as amended, nor will they be registered with any state securities regulator. Accordingly, the models are not subject to compliance with the requirements of such acts.
Investments in bitcoin and other digital assets are subject to significant risk and are not suitable for all investors. It is possible to lose your entire principal investment.
An investment in the Strategy may be subject to risks which include, but are not limited to, risks related to small- and medium-capitalization companies, emerging market issuers, foreign securities, foreign currency, equity securities, credit, interest rate, floating rate, commodities, underlying funds, derivatives, non-diversification, sector, market, economic, political, regulatory, world event, index tracking, cash transactions, operational, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, issuer-specific changes, and index-related concentration risks, all of which may adversely affect the Strategy. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks. Small- and medium-capitalization companies may be subject to elevated risks. Derivatives may involve certain costs and risks such as liquidity, interest rate, and the risk that a position could not be closed when most advantageous.
Please note that any content generated by an Artificial Intelligence (AI) system has not been subject to a human review, and thus no assurance can be made as to its accuracy. Please exercise caution when using AI systems and verify the content produced through such systems wherever possible.
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All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.
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Volatility reared its head across the financial markets in April and crypto assets were not spared. The uncertainties around tariff policy in the aftermath of “Liberation Day” led to a month where bitcoin (BTC) dropped below $76,000 before recovering mid-month and rising nearly 25% off that low through yesterday.
Equities and other risk assets were also exposed to this volatility, but what was notable to see is that, once again, crypto assets recovered faster than other risk assets. Using the Nasdaq Crypto IndexTM (NCITM) as the proxy for the digital asset market, we can see that crypto outperformed both the S&P 500 and gold in the weeks following the US regional banking crisis in early 2023, the yen carry trade unwinding in August of 2024, and the implementation of Trump’s tariffs this month.
Source: Hashdex Research with data from CF Benchmarks and Bloomberg (from March 9, 2023 to April 27, 2025). Since 30 full days have not yet passed since “Liberation Day,” we use performance data up through 4/27/25 to illustrate the period.
Why is this? We are seeing a growing convergence of market behavior, regulatory progress, and real-world use cases that are strengthening the investment case for crypto. Two major developments in particular deserve attention. First, bitcoin is maturing as a store-of-value asset, increasingly behaving like “digital gold” in institutional portfolios. Second, the rapid global adoption of stablecoins and the emerging tokenization trend are reinforcing the value proposition of smart contract platforms like Ethereum and Solana, underscoring their role as the infrastructure layer of a new financial system. Together, these trends are accelerating crypto’s integration into the global economy and creating compelling long-term investment opportunities.
Bitcoin’s growing role as a store of value
Bitcoin’s core investment thesis has long centered around its scarcity, decentralization, and resistance to censorship. But for much of its history, it was seen more as a speculative asset than a reliable store of value. We are seeing increasing evidence that this perception is now shifting, notably last week when BTC rose alongside gold as stock indices fell and the US dollar hit a three-year low.
Three developments have been key to bitcoin’s evolution as a store-of-value asset:
- Macro environment alignment: Bitcoin is increasingly viewed as a hedge against currency debasement and long-term monetary instability. With developed economies still grappling with inflationary pressures and debt sustainability, investors are reassessing the role of hard assets in portfolios. Gold has historically served this role—but bitcoin, with its verifiable scarcity (a fixed 21 million supply), global liquidity, and portability, is increasingly seen as a digital alternative. Recent correlations during macro events further reinforce this view. In 2023 and early 2024, bitcoin often moved in tandem with gold during geopolitical tensions and inflationary scares, signaling that markets are beginning to treat it as a safe-haven asset rather than a purely risk-on trade.
- Institutional infrastructure and spot ETFs: The launch of US-listed spot bitcoin ETFs in early 2024 marked a watershed moment. This development provided investors with a simple, regulated, and cost-efficient way to gain exposure to bitcoin through traditional financial channels. As more institutional-grade custody, execution, and compliance infrastructure goes live, we expect bitcoin’s correlation with traditional safe-haven assets to strengthen further, reinforcing its store-of-value narrative.
- On-chain metrics and long-term holders: Perhaps most telling is the behavior of bitcoin holders. On-chain data shows that a significant percentage of bitcoin is now held by long-term investors—wallets that have not moved funds for over a year. These holders typically exhibit low sensitivity to price volatility and reflect growing confidence in bitcoin as a long-term asset. This behavior supports price stability and reduces sell pressure during market downturns. It also aligns with the characteristics we expect from a mature store-of-value asset.
Stablecoins, tokenization, and the smart contract opportunity
While bitcoin is moving toward a role as digital gold, the demand for stablecoins—digital assets pegged to fiat currencies, most commonly the US dollar—is rising. In addition, tokenized money-market funds are on the rise since the beginning of 2023, with traditional institutions, such as BlackRock and UBS, already tapping into this market and gathering billions of dollars under management in their own version of yield-bearing dollar tokens. Ethereum, its suite of Layer-2 solutions, and other smart contract platforms like Solana and Avalanche are the very networks used to tokenize real-world assets, facilitating transactions and adding programmability and new utility made possible due to the speed, security and composability of public blockchains. Dollar stablecoins, particularly USDC and USDT, now facilitate nearly $3 trillion in annual transaction volume, surpassing the combined volumes of PayPal, Venmo, and Western Union. Their utility spans remittances, on-chain trading, and merchant payments.
The growth of stablecoins and tokenization is clearly not merely a crypto-native phenomenon. Financial institutions and fintech companies are integrating stablecoins into their products, and multiple jurisdictions—from Singapore to Brazil to the US—are exploring regulatory frameworks to support their use.
So, why does this matter for Ethereum and other smart contract platforms?
- Stablecoins and tokenization drive blockchain activity: Stablecoins are the most widely used applications on programmable public blockchains. Ethereum remains the dominant platform for stablecoin issuance and transaction settlement, and its competitors are also experiencing continued growth in the past several years. This trend generates fees on these networks, securing demand for their native tokens, and incentivizing ongoing infrastructure development. This economic activity supports the investment case for assets like ETH and SOL as “yield-generating” assets (through staking) and as the fuel required to power network computation.
- Network effects and platform stickiness: Smart contract platforms benefit from strong developer mindshare, extensive tooling, and a deep ecosystem of wallets, DeFi protocols, and onramps. Stablecoins and tokenization amplify this ecosystem by making blockchains more usable and more financially relevant to everyday users. As these become embedded into mainstream financial products—like savings accounts, neobanks, and cross-border commerce—they create persistent demand for the networks that support them.
- Smart contract monetization models: The success of stablecoins and the emerging trend of tokenization also hint at the business models of tomorrow. Blockchains that can efficiently process high volumes of transactions—while maintaining low fees and regulatory compliance—will capture significant value.
Implications for investors
These dual narratives—bitcoin as digital gold and smart contract platforms as financial infrastructure—are not mutually exclusive. They complement one another and represent two pillars of the evolving digital asset thesis. For long-term investors, this presents a clearer framework for portfolio construction:
• Bitcoin: A macro hedge and store of value, increasingly playing a role similar to gold in diversified portfolios. Best positioned to benefit from macro uncertainty and institutional adoption.
• Smart contract platforms: Growth assets tied to the expansion of on-chain economic activity, especially in stablecoin usage, tokenization, and DeFi. These platforms will benefit from network usage, staking yields, and infrastructure adoption.
As always, risks remain—from regulatory fragmentation to network competition. But unlike previous cycles, we are now seeing real-world adoption driving demand and investor interest. Bitcoin and smart contract platforms are no longer just ideas. They are working systems with proven use cases and growing economic gravity.
At Hashdex, we believe digital assets are entering a new phase—one characterized less by speculative mania and more by measurable integration into the global economy. Bitcoin’s maturing role as a store of value, alongside smart contracts’ central position in powering stablecoin and tokenization infrastructure, underscores this shift.
Our index-based investment strategies are built to capture this evolution: favoring assets with enduring network effects, regulatory momentum, and demonstrated economic utility. As the market continues to evolve, we remain committed to helping investors navigate this journey with clarity, conviction, and a long-term mindset.
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