South Africa holds 86% of the world’s platinum reserves, 70% of its rhodium, and ranks among the top gold producers globally. Yet, most retail investors overlook these commodities, favoring stocks, bonds, and property. In 2024, the Rand depreciated by 7% against the US dollar, and inflation averaged 5.3% (StatsSA), exposing portfolios heavily concentrated in local assets to currency erosion and market volatility.
This over-reliance on traditional financial instruments limits diversification and misses opportunities to hedge against economic uncertainty. Precious minerals—gold, platinum, rhodium, and palladium—deeply tied to South Africa’s economy and global demand, offer a solution. This blog explores why these metals deserve a place in your investment strategy, providing practical steps to integrate them effectively.
The Economic Landscape of South Africa
Mining is a cornerstone of South Africa’s economy, contributing 7.6% to GDP directly and 17.8% indirectly in 2023 (StatsSA). The sector employs over 475,000 people and drives 20% of export revenue through precious metals (South African Chamber of Mines, 2024). However, challenges like labor disputes, energy shortages, and global commodity price swings create volatility.
The Rand’s long-term depreciation—averaging 5-7% annually against major currencies over the past decade—enhances the appeal of commodities priced in US dollars. With global inflation rising (6.2% in 2024, per IMF), minerals like gold, a historical safe haven, gain strategic importance for South African investors.
What Are Precious Minerals?
Precious minerals, primarily gold, platinum, rhodium, and palladium, are rare metals valued for industrial, monetary, and aesthetic uses. South Africa leads production, especially for platinum group metals (PGMs):
- Gold: A store of value, used in jewelry, electronics, and central bank reserves.
- Platinum: Essential for auto-catalysts and hydrogen fuel cell technology.
- Rhodium: A niche PGM for catalytic converters, known for extreme price swings.
- Palladium: Used in automotive and industrial applications, similar to platinum.
The table below compares these minerals based on investment metrics (2014–2024 averages):
| Mineral | Primary Use | SA Global Rank | Volatility (Std Dev) | Inflation Hedge | Avg. 10-Yr Return |
| Gold | Store of value, jewelry | #9 Producer | Medium (15%) | High | 7.8% |
| Platinum | Auto-catalysts, jewelry | #1 Producer | High (22%) | Moderate | 4.2% |
| Rhodium | Industrial, catalysts | #1 Producer | Very High (40%) | Low | 16.5% (volatile) |
| Palladium | Auto-catalysts, tech | #2 Producer | High (25%) | Moderate | 9.1% |
These metals’ distinct demand drivers—monetary for gold, industrial for PGMs—make them valuable for diversification.
Why Traditional Portfolios Are Falling Short
South African retail portfolios are often concentrated in JSE equities (60%, per 10X Investments, 2023) or property (25%). The JSE All Share Index returned 8.2% in 2024, but inflation-adjusted returns were just 2.9%, trailing gold’s 10.1% USD return. Property funds, impacted by high interest rates, averaged 3.5% annually from 2020–2023 (STANLIB Property Index).
Case Study: 2020–2023 Performance
Compare three portfolios over 2020–2023:
- Equity-Heavy: 80% Ashburton Top 40 ETF, 20% cash. Annualized return: 5.8%, volatility: 18%.
- Property-Focused: 60% STANLIB Property ETF, 40% bonds. Annualized return: 3.2%, volatility: 12%.
- Commodity-Inclusive: 50% JSE equities, 30% bonds, 20% NewGold ETF. Annualized return: 7.1%, volatility: 14%.
The commodity-inclusive portfolio outperformed, with gold stabilizing returns during JSE downturns (e.g., 2022’s energy crisis). Overconcentration in equities or property exposes investors to sector-specific risks.
Precious Minerals as a Portfolio Hedge
Precious minerals excel as hedges:
- Gold: A proven inflation hedge, its price rose 15% in USD during 2022’s global inflation spike. Its low correlation with equities (0.2, 2014–2024) stabilizes portfolios.
- Platinum and Palladium: Linked to automotive and green energy sectors, PGMs benefit from electric vehicle (EV) and hydrogen fuel cell demand, projected to grow 5% annually through 2030 (Johnson Matthey, 2024).
- Rhodium: Its niche industrial role drives periodic price surges, offering speculative upside.
Like insurance for physical assets, precious metals protect purchasing power against inflation, currency depreciation, and market crashes. Their USD pricing shields South African investors from Rand volatility.
The Accessibility Myth: Can the Average Investor Access These Assets?
Many believe precious metals are out of reach, but retail investors can access them easily:
- ETFs: NewGold ETF (GLD) tracks gold prices with low fees (0.4% annually). Satrix offers PGM-focused ETFs.
- Mining Stocks: Anglo American Platinum (AMS) or Sibanye Stillwater (SSW) provide PGM exposure, though with operational risks.
- Unit Trusts: Absa NewGold Fund offers managed exposure.
- Physical Metals: Available via dealers like the South African Mint, but high storage and security costs reduce appeal.
Platform Comparison
| Investment Vehicle | Entry Cost | Liquidity | Risk Level | Platform Example |
| Physical Gold | High (R50,000+) | Low | Low | SA Mint, Dealers |
| ETFs | Low (R100+) | High | Low-Medium | EasyEquities, SatrixNOW |
| Mining Stocks | Medium (R1,000+) | High | High | JSE (Amplats, Sibanye) |
| Commodity Futures | High (R100,000+) | Low | Very High | Advanced Brokers |
Platforms like EasyEquities (0.25% trade fee) and SatrixNOW (no minimums) make investing accessible.
The Volatility Argument: Risk vs. Reward
Precious metals can be volatile, especially PGMs. Rhodium’s price surged from $2,000/oz in 2018 to $29,000/oz in 2021, then fell to $4,500/oz by 2024 (Heraeus). Platinum and palladium fluctuate with automotive demand and supply disruptions. Gold, with 15% annualized volatility, is stabler than Bitcoin (50%).
The table below shows average annual prices (USD/oz) for these minerals from 2019–2024, highlighting their volatility:
| Year | Gold | Platinum | Rhodium | Palladium |
| 2019 | 1,393 | 864 | 3,900 | 1,539 |
| 2020 | 1,770 | 883 | 6,500 | 2,197 |
| 2021 | 1,799 | 1,092 | 20,250 | 2,408 |
| 2022 | 1,800 | 961 | 15,800 | 2,116 |
| 2023 | 1,940 | 992 | 7,200 | 1,412 |
| 2024 | 2,150 | 950 | 4,500 | 1,050 |
Source: Heraeus, Kitco, World Bank (2024 estimates).
Rhodium’s 2021 spike reflects supply constraints, while gold’s steady rise underscores its safe-haven status. Compared to cryptocurrencies, metals offer intrinsic value and industrial utility. The key is position sizing: allocate 5–15% to precious metals to balance risk and reward.
Insights from Top Investors & Institutions
Global institutions endorse precious metals. The World Gold Council (2024) reported central banks added 1,037 tons of gold to reserves, the highest in decades. The IMF notes gold’s share in global reserves rose to 15% in 2024, up from 10% in 2014.
Locally, Coronation Fund Managers recommend 5–10% gold exposure for balanced portfolios, citing its low JSE correlation. Allan Gray’s commodity funds include PGMs for green energy exposure. Warren Buffett, despite past skepticism, invested in Barrick Gold in 2020, signaling metals’ value in uncertain times.
Action Plan: How to Incorporate Precious Minerals Today
To integrate precious metals:
- Assess Risk Profile: Use EasyEquities’ portfolio analyzer to check equity or property overweight.
- Select Vehicles: Start with ETFs (NewGold, Satrix PGM). Consider mining stocks (Sibanye Stillwater) for higher risk/reward.
- Start Small: Allocate 5–10% initially. For a R100,000 portfolio, invest R5,000 in NewGold ETF and R5,000 in a PGM ETF.
- Monitor Trends: Track PGM demand for EVs and hydrogen tech. Rebalance annually.
- Consider ESG: Mining has environmental impacts. Choose funds with sustainable practices, like Sibanye’s renewable energy initiatives.
Sample Model Portfolios
| Portfolio Type | Risk Appetite | Precious Metal Allocation | Sample Assets |
| Conservative | Low | 5% (Gold ETFs) | NewGold ETF, RSA Bonds, JSE Equities |
| Balanced | Medium | 10% (Gold + PGM ETFs) | NewGold, Satrix PGM, STANLIB Property |
| Aggressive | High | 15% (ETFs + Mining Stocks) | NewGold, Amplats, Rhodium Futures |
Note: Adjust based on goals and market conditions (2024 data).
In South Africa’s volatile economy, precious minerals offer diversification, inflation protection, and exposure to global trends like green energy. Gold stabilizes, while platinum and rhodium tap into industrial demand. With ETFs and low-cost platforms, these assets are accessible to all. As markets shift, looking beneath the surface—literally—may be wise. Start small, invest thoughtfully, and let South Africa’s mineral wealth fortify your financial future.
