Investors in Platinum Group Metals (NYSEMKT:PLG) are striking gold on Tuesday. In fact, PLG stock is up more than 25% in intraday trading and climbing higher. But without any news from the company, what do you need to know about Platinum Group?
To start, what exactly is Platinum Group Metals? Well, as its name implies, the company acquires, explores and develops platinum and palladium properties. In addition to those two precious metals, it also explores for rhodium, gold, ruthenium, iridium, copper and nickel.
That is quite the lengthy list! And importantly, Platinum Group Metals concentrates much of its mining efforts in South Africa. There, it has an effective interest in the Waterberg project of about 50%.
Investors should note that this project, and its role in the platinum and palladium market, is likely what has PLG stock up on Tuesday. This is because demand for platinum and palladium continues to grow, and platinum prices are climbing. Plus, the novel coronavirus hit projects like Waterberg in South Africa hard. This means that with Covid-19 supply constraints, the situation is extra sparkly.
What do I mean? Well, it turns out you can count the precious minerals business among the victims of the novel coronavirus. In fact, the Wall Street Journal recently reported that disruptions have boosted the popularity of platinum while gold stalls. Part of this is because lockdowns kept mining operations in South Africa from delivering normal supply.
However, as PLG stock climbs on Tuesday, there is another series of catalysts at play…
Why PLG Stock Is Climbing Today
To understand the other catalyst at play here, investors should know exactly where the demand for platinum and palladium comes from. Importantly, much of the demand for platinum used to come from jewelers and traditional automakers. In recent times, this means that platinum prices have struggled and the metal has been less appealing. Now though, a new opportunity for platinum is sparking investor interest.
It turns out that PLG stock is a big beneficiary of the clean energy trend at play right now. How? Well, demand for hydrogen power is rising. However, traditional hydrogen comes from the petroleum refining process. This means that as companies and consumers work to be as eco-friendly as possible, many are turning to green hydrogen. Platinum comes into play in this green hydrogen production process. Essentially, it plays a role in the electrolysis of water that generates green hydrogen for use in everything from forklifts to freight trucks.
Keep a close eye on Platinum Group Metals and the future of the platinum and palladium markets. Green hydrogen demand could take PLG stock even higher.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.