With its recent all-time high of $1150 an ounce, gold is getting all the attention in the metals world. After all, with the real threat of inflation looming investors have gone to all lengths to get their hands on the hot commodity. However, two other precious metals have been quietly rallying to their highest levels in 15 months. Platinum has reached $1,440 an ounce and its cheaper alternative sister, palladium, has recently hit a 15-month high of $372. Investors may want to take note of these two commodities for a number of reasons.

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Precious and Industrial
China and India are moving forward with large-scale plans to reduce the amount of carbon emissions in their respective countries. Currently, more than half of platinum and palladium mineral goes into making catalytic converters. These devices take damaging greenhouse discharges from automobiles and other outlays and then converts them into less harmful substances. As emerging markets like China and India move to develop higher emission standards and protocols these two metals will continue to see demand.

In addition, platinum and palladium are also used in the manufacture of dental applications, electronic components and jewelry applications. However, the potential for the metal group in alternative energy is great with the recent discovery of a "cold fusion" technique. Researchers in California and Italy have created a process for creating energy that blends hydrogen from seawater, palladium and an electric current. The cold fusion concept is appealing as an alternative energy source because there are no harmful by-products and the energy created exceeds the amount produced by nuclear or "hot" fusion technologies. While these power sources are years away, platinum and palladium still have a vibrant future in the aiding of carbon emissions from the transportation industry.

The Portfolio Plays
ETF Securities, a global fund issuer that specializes in physically-backed ETFs, has filed to launch the ETFS Palladium Trust. This fund will add to its U.S. offerings which include the ETFS Physical Silver Shares (NYSE:SIVR) fund and ETFS Physical Swiss Gold Shares (NASDAQ: SGOL). The new palladium fund has been tentatively given the symbol PALL. These ETFs function in the same way as the popular iShares COMEX Gold Trust (NYSE: IAU) and have proven to be extremely popular with investors. For a platinum play, the iPath Dow Jones-UBS Platinum Trust ETN (NYSE: PGM) and the E-TRACS UBS Long Platinum ETN (NYSE: PTM) offer exposure to metal. These exchange traded notes both rely on futures contracts to achieve their objectives as opposed to physically-holding platinum.

Domestic Plays
Platinum group metals are predominately found outside the United States, with Russia as the world's largest palladium producer and South Africa as the leader in platinum production. These two countries accounted for nearly 80% of the world's supply in 2008. Domestic pure stock plays are few and far between.
North American Palladium (AMEX: PAL) and Stillwater Mining (NYSE: SWC) offer investors a chance to participate in the growth of the domestic mining sector for these two metals.

Bottom Line
With its recent surge, gold is getting all the attention in the commodity world. However, the platinum group metals may offer investors some real long term upside as their industrial uses continue to grow. The physically backed funds offer a direct play on the price of the metals while North American Palladium and Stillwater Mining present the chance to partake in the upside of mining activity. (To learn more, see A Beginner's Guide To Precious Metals.)

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