The 44-year-old scientist is exploring ways to extract the exotic metals that have spiked 300 percent in price over the past year, driven in part by trade tensions with China which enjoys a near-monopoly on their export.
"It's incredible that almost no one has thought of this before," Palitzsch said, pacing eagerly around bubbling test-tubes.
For the moment, his work is focused on recycling indium from solar panels.
Not catagorised as one of the precious rare earths, this metal is nonetheless needed to make flat-screen televisions. Like rare earths, its price has soared.
Using a technique he has patented, Palitzsch plunges the solar panels into a vat containing a special chemical solution, then collects the residue from which he extracts the valuable indium.
But he is already turning his attention to the extraction of europium - a rare earth used to produce the colour red in television screens - from the glowing white powder found in energy-saving light bulbs.
For years, he tried in vain to hawk the idea around German firms and eventually turned to Asia.
"I was invited to talk about my discoveries in Tokyo and I got the impression that the topic was considered much more interesting in Japan than here at home. We Germans are sometimes too slow on the uptake," he said.
Tech giant Japan suffered most when China reportedly halted rare earth shipments to its Asian rival in September following a territorial row.
Beijing eventually restarted the flow and denied any embargo but the hiatus induced Tokyo to begin to look elsewhere for its supply, notably resource-rich Australia, which hopes to break Chinese production dominance.
Experts have warned that global demand will outstrip supply next year, with China's own needs alone overtaking total global production by 2016.
As for Palitzsch, he got the idea of recycling the precious commodities while working for a firm that produced water treatment products that was being hammered by a spike in aluminium prices in 2007 and 2008.
He recalled how his father would scrupulously save the metallic caps on yoghurt pots and milk bottles and resell them.
With the help of some old university friends, who worked in the solar panel business that flourished in the former East Germany, he hit on the idea of recycling the aluminium in solar cells.
Palitzsch hopes soon to begin large-scale recycling of solar panels.
"We have to start thinking about this now, not in 25 years when we need to rebuild or dismantle all the solar parks," he said.
Despite the initial dearth of interest in Germany, the economy ministry has awarded a grant of €85,000 to help Palitzsch and his boss, Ulrich Loser, to develop their ideas on an industrial scale.
But while Palitzsch is bullish, experts are more cautious.
Recycling rare earths "is very complex, I don't believe recycling them can be done on a large scale in the short term," said Volker Steinbach, a geologist at the German institute of raw materials.
"If there is any potential, it will be in the medium- to long-term."