Palladium: Is it the next Gold?

When you ask people to name the 4 precious metals, most people can quickly name Gold, Silver and Platinum. Palladium is not as well known as the others but recently has gotten more attention as its price has increased. Lets have a closer look at the the Ringo Star of the precious metals.

is used in various technological devices but most commonly in catalyctic converters for gasoline based cars along with platinum and rhodium.

Demand

Paladium is used in various technological devices but most commonly (>80% of use cases) in catalytic converters for gasoline based cars along with platinum and rhodium.

In the US and China Palladium is used in catalytic converters and in Europe mostly platinum is used.

2019 has not been great for automotive sales in China and the US.

Electric vehicles do not have catalytic converters thus in the future this need for palladium will decline unless other usecases are found.

Put arrow up, down, or traffic light

Supply

The majority of Palladium originates from Russia and South Africa. There is evidence that the production in Russia is declining. In South Africa labor strikes have put the output of palladium under pressure

There is about 1 to 4 years of mined Palladium in above ground stocks. This increases supply and reduces the price.

Same for arrup up or down or traffic light.

Price action

The chart below shows the amazing run Palladium has had the last year. Any retrace could be worth a pickup. The area between $100 and $120 looks promising if it ever gets there.

How to buy

1. There are Palladium ETF’s such as Sprott Physical Platinum and Palladium Trust  SPPP, Physical Palladium PHPD or Aberdeen Standard Physical Palladium Shares PALL.
2. Investors can also buy physical  palladium bullion.
3. Palladium mining stocks. There are some palladium mining companies in the US, but as earlier stated the majority is mined in Russia and South Africa.

Verdict.

Not as bullish. People are more familiar with Gold. We don’t see automotive sales in the next couple of years hit new all time highs with a looming recession. We can already see the sales of cars in the two largest markets decline which is the main use component for palladium.