The Lowdown on Palladium
When it comes to precious metals, most people instantly think about gold and silver here – they’re the oldest precious metals and have always been a safe bet, after all. This has left platinum and palladium on the sidelines, but in actual fact, palladium did better than silver, gold and platinum in 2016 and 2017.
It’s true that palladium is something of a wildcard metal – not many people know much about it and it might seem unpredictable – but it’s increased in value by 10-20% each year for the last few years.
If you fancy a flutter on palladium, then you need to know a bit more about it, its uses and the pros and cons of this metal.
How rare is palladium?
Palladium is one of the rarest precious metals on earth – it’s about 15 times rarer than platinum and 30 times rarer than gold.
Where is it found?
Most palladium is mined in Russia (41%) and South Africa (38%), with smaller amounts coming from the US, Canada and Zimbabwe.
What are its uses?
Palladium is used in electronics, dentistry, fuel cells and in automobile manufacture. The metal is used in catalytic converters, which accounts for more than half of its industrial consumption.
How can you buy palladium?
- you can buy physical bars and coins, just like you can with silver and gold, but you may find them harder to sell in the future; if you choose coins, go for bullion coins rather than collectibles;
- you can buy futures on a number of exchanges, with each exchange having its own contract size limits and minimum price fluctuations;
- you can also by Exchange Traded Funds (ETFs) – where physical and insured palladium bars are held in a secure vault that tracks the spot price of the metal, and
- you can buy stocks in palladium mining companies; this isn’t an easy route to take as lots of mines don’t really advertise the fact that they mine the metal as it’s still a bit niche. If you’re prepared to put in the effort, you can find a miner, but there are easier routes.
A note of caution
Although precious metals broadly follow the same tracks within the global markets, they do go their own way to a certain extent. Palladium is often viewed as platinum’s “sister” metal, but even so, it doesn’t follow it so closely anymore. In fact, in recent years platinum has been taken more and more into the precious metal fold while palladium has been behaving – and been viewed – as a high-value industrial metal.
This may help investors, though, as it’s easy to track industrial rises and falls; this will make it easier to predict how palladium will fare in the next year or so. In some ways, palladium is not so kooky, because while it has a different path to the more familiar precious metals, it leaves clear (and industrial) signposts.
To sum up, palladium is still something of a specialist, unknown, metal. It follows industrial demand very closely so anyone who’s used to investing in gold will need to unlearn their lessons and adopt a different mindset if they want to make a success with palladium.