June 5 (Bloomberg) -- Investors should sell platinum and buy palladium when the spread between the precious metals exceeds $1,000, making platinum “extremely expensive” for industrial users, according to Equidex Brokerage Group Inc.

The CHART OF THE DAY shows the difference reached $1,037 yesterday, the widest since September. The spread briefly rose to four digits on April 13, before narrowing in the next two weeks. An expanding gap encourages automakers to switch to using palladium in emissions-control devices, said Philip Gotthelf, president of Equidex in Closter, New Jersey.

“We see that spread as a significant opportunity,” Gotthelf said in a telephone interview yesterday. “When the spread is that high, it no longer makes any economic sense for catalytic-converter producers.”

About half of the world’s platinum and palladium output goes into auto parts, according to Johnson Matthey Plc, a London-based researcher and metal refiner. Palladium purchases by the vehicle industry fell 3.6 percent last year compared with platinum’s 8.2 percent decline, as demand for cars and trucks slowed, Johnson Matthey said last month.

Platinum for immediate delivery has climbed 38 percent this year and traded yesterday in London at $1,295 an ounce, its highest in almost nine months. Palladium has rallied 35 percent this year to $254 an ounce. The metals are also used in jewelry and as an investment asset.

(To save a copy of the chart, click here.)

To contact the reporters on this story Halia Pavliva in New York at hpavliva@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net

Last Updated: June 4, 2009 19:00 EDT