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Yesterday saw another good day for PGMs with Platinum hitting an all time high at $1965 an ounce and rhodium up $450 in London to record breaking $8525 an ounce, up by nearly 25% this year already after a meteoric rise of 23 % in 2007.

Rhodium is a by product of platinum production.

 
According to some estimates it will take Eskrom, the electric power supplier for South Africa, until 2012 to restore full capacity. South Africa accounts for some 80% of world platinum production and with demand expected to grow as supply diminishes there seems no other way for the price to go but up, up, up.

Amongst the growing number of applications for both metals are their use in catalytic converters in the auto industry. With virtually every country in the world waking up to green issues, eco friendly exhaust systems are becoming mandatory everywhere, hence the necessity for platinum and rhodium as no other satisfactory alternative for their use as catalysts in the systems has yet been discovered.

So bad has the disruption to power supplies become that South Africa has declared a National energy emergency. Reports from some analysts suggest that 2008 will see a platinum shortfall of 400,000 ounces on top of last year’s deficit of around 275,000 ounces.

If this play appeals have a look at Platinum ETFs, where physical holdings of the metal have grown to about 200,000 ounces. For a broader spread of risk we like the look of SPDR S & P Metals and Mining (XME) but as always do your research and don’t take our word, or anybody else’s, for it!