Demand drivers and investor reflexivity

Stijn Schmitz welcomes Trader Ferg to the show. Trader Ferg is Full-time Trader & Author of the Trader Ferg Substack. Trader Ferg provides a comprehensive analysis of the precious metals market, with a particular focus on platinum group metals (PGMs). He highlights the significant developments in the platinum market, notably China’s launch of new futures contracts and their strategic cornering of above-ground platinum inventories. Ferg estimates that approximately 85% of global platinum inventories are now held in China, creating a potential supply deficit that could drive prices significantly higher.

They also explore the complex dynamics of platinum, rhodium, and other PGMs. Ferg challenges the narrative that electric vehicles will dramatically reduce demand for catalytic converters, arguing that hybrid vehicles actually require more catalytic converter material.

Ferg also sees substantial potential in rhodium, having invested 5% of his net worth in the metal and believing it could experience another substantial price surge. Expanding to the broader precious metals complex, Ferg discusses the evolving market dynamics for gold, silver, and other commodities. He emphasizes the increasing importance of physical delivery markets, particularly in China, and the potential breakdown of paper trading markets.

Ferg has an optimistic outlook on precious metals, driven by fundamental supply-demand imbalances, central bank buying, and increasing physical demand. His investment approach focuses on finding asymmetric opportunities in overlooked or undervalued sectors. He looks for markets with limited supply responses, consolidated industries, and fundamental misunderstandings about long-term demand. Beyond precious metals, he shows interest in energy services, offshore drilling, and tin production.

Timestamps:
00:00:00 – Introduction
00:01:11 – Platinum Bull Drivers
00:02:41 – Chinese Futures Premiums
00:03:40 – Physical Market Shift
00:07:47 – Sponsor Break
00:08:36 – Supply Constraints Analysis
00:14:57 – Demand Surge Factors
00:16:38 – Rhodium Investment Case
00:20:37 – PGM Future Outlook
00:22:33 – Basement Trade Debate
00:26:32 – Silver Physical Crunch
00:33:01 – Gold Portfolio Role
00:39:20 – Other Commodity Setups
00:48:18 – Substack and Wrap Up
00:49:03 – Concluding Thoughts

Guest Links:
Substack: https://traderferg.substack.com/
X: https://x.com/trader_ferg

Trader Ferg is a Full-time trader for going on 8+ years now. He has a habit of hanging out in hated corners of the market that are considered uninvestable. He enjoys sharing his research and thoughts about possible trades and markets.