Investing In Palladium: Is Palladium a Good Investment?
Investing In Palladium: Is Palladium a Good Investment?
Discover the rare precious metal that's rarer than gold and powers the automotive industry
The Rarest Precious Metal Investment
The most famous precious metals to invest in are gold and silver, but there is an even rarer precious metal on the market: palladium.
Current Precious Metals Price Comparison
Palladium's spot price per troy ounce is roughly $2,000 per troy ounce but is down 5.5% over the past 30 days.
This is mainly over concerns that Russia, one of the top suppliers of the metal, will be impacted by its ongoing war against Ukraine. It's also due to several other factors including supply-chain disruptions and lack of investment in palladium mining projects.
Why Palladium is Valuable
Despite the price drop, palladium is still more expensive than gold, which is priced at roughly $1,800 per ounce. Why is palladium considered one of the most valuable precious metals on the market? There are many opportunities that allow palladium to increase in value over time, which could make it a profitable investment opportunity for you.
Palladium Investment Guide
What is palladium and its key properties
Palladium is a rare, silver-colored precious metal and falls under the commodity category. It is often referred to as white gold because of its unique features and makeup. Palladium is used in industrial manufacturing, in catalytic converters for cars, and in jewelry.
🧪 Element Properties
- Element number 46 on the Periodic Table
- Closely related to platinum
- Rare, silver-colored appearance
- Often called "white gold"
Palladium's unique chemical properties make it valuable for industrial applications.
🏭 Industrial Uses
- Catalytic converters for automobiles
- Electronics manufacturing
- Dental procedures and equipment
- Chemical production processes
Valuable because it's used in production of automobiles, electronics, and dentistry.
📈 Market Characteristics
- Historically volatile price movements
- Supply shortage conditions
- High industrial demand
- Limited mining production
The price of precious metals tend to be volatile and palladium is no exception.
Palladium Use Case Distribution
More than 80% of palladium's uses come from the automotive industry for catalytic converters.
Supply and Demand Dynamics
This precious metal is valuable because it is used in the production of automobiles, electronics, and dentistry. It has a history of price swings, especially since there has been a supply shortage of palladium, which could help its price rally.
5 compelling reasons to invest in palladium
1. 🏦 Store of Wealth
Just like gold, silver, and platinum, palladium is often held as an investment. It holds several benefits when used as a store of wealth.
- Maintains value over time periods
- Moves at similar pace to gold
- Rarer precious metal than gold
- More volatile than other precious metals
A store of value refers to an asset or commodity that maintains its value over a period of time. Palladium is rarer than gold, which means its value can increase in the future.
2. 🚗 Many Use Cases
One of the reasons that palladium is valuable is because it has many use cases across multiple industries.
- Automotive: Catalytic converters (80%+ of demand)
- Industrial: Chemical production materials
- Jewelry: Precious metal jewelry making
- Electronics: Laptops and smartphones
- Medical: Dental procedures and equipment
Palladium is used in catalytic converters for automobiles. This means there is high demand for palladium in the auto industry.
3. 📊 Portfolio Diversification
Investing in palladium is a great way to add to your portfolio's diversification among precious metals.
- Diversify among precious metals
- Achieve unique benefits of palladium
- Manage tough market environments
- Strong performance during economic stress
The broader market has been on a downward trajectory. Stocks have been falling and investors are removing risky assets. It's important to diversify among different asset classes like palladium.
4. 📈 Portfolio Growth
Investors can include palladium in their long-term investment strategy for portfolio growth potential.
- Best hedge against inflation
- 7%+ returns over 6-month period
- Outperformed S&P 500 (-16%) during same period
- Post-pandemic economic environment benefits
Living in a post-pandemic economy means dealing with inflation. Commodities and physical assets like palladium are some of the best hedges against inflation.
5. 🔥 High Demand
Palladium is a precious metal that is in high demand from various industries but there is a low supply.
- High demand, low supply dynamics
- Russia supply disruption concerns
- Environmental push for cleaner emissions
- Catalytic converter demand growth
This makes the precious metal scarce, which is an attractive feature for an investment. Russia is one of the world's largest producers, and ongoing conflicts hinder production.
Market Performance Analysis
For the past six months, palladium has returned more than 7% to investors. During a similar time frame, the S&P 500 is down more than 16%. In a market lined with uncertainty, palladium can help add growth to an investment portfolio.
- 6-month palladium return: +7%
- S&P 500 same period: -16%
- 23 percentage point outperformance
- Demonstrates defensive characteristics during market stress
Environmental Catalyst
With the push to be more environmentally conscious, the auto industry is looking to reduce vehicle exhaust emissions through catalytic converters. Palladium is one of the key components in these converters, driving continued industrial demand.
3 ways to invest in palladium
Physical Palladium
A popular way to hold palladium is to physically own palladium bullion in the form of bars or coins.
Popular Palladium Bars:
- PAMP Suisse palladium bars
- Credit Suisse palladium bars
- Johnson Matthey Lewis and Clark bars
Popular Palladium Coins:
- Canadian Palladium Maple Leaf coins
- Russian Ballerina palladium coins
- American Eagle Palladium coins
Follow the link to shop for palladium bars and palladium coins from Gainesville Coins
Palladium ETFs
An easy and passive way to invest in palladium is through exchange-traded funds backed by the precious metal.
Aberdeen Standard Physical Palladium (PALL):
- Tracks spot price of palladium bullion
- Secured bars stored in vault
- Current value: $191.60
- Expense ratio: 0.60%
Sprott Physical Platinum & Palladium (SPPP):
- Alternative to physical ownership
- Combined platinum and palladium exposure
- Price: ~$13 per share
- Expense ratio: 1.04%
Palladium ETFs allow investors to gain exposure without personally owning the physical metal.
Palladium Stocks
Purchase shares of publicly-traded companies focused on palladium mining and production.
Major Palladium Mining Companies:
- Sibanye-Stillwater (SBSW): Major palladium miner
- Impala Platinum Holdings (IMP): Integrated platinum group metals
- Other mining companies with palladium exposure
Similar to palladium ETFs, you can purchase palladium-linked stocks for indirect exposure to this precious metal.
Stock-Specific Risks
Remember that mining stocks carry additional risks beyond palladium price movements, including operational, regulatory, and company-specific factors.
| Investment Method | Direct Exposure | Storage Required | Liquidity | Additional Risks |
|---|---|---|---|---|
| Physical Palladium | Yes | Yes | Medium | Storage, insurance |
| Palladium ETFs | Yes | No | High | Management fees |
| Mining Stocks | Indirect | No | High | Company operations, market risk |
Market outlook and considerations
🌍 Supply Challenges
Russia is one of the world's largest producers of precious metals, especially rare ones like palladium.
- Russia major global palladium supplier
- Ukraine conflict impacts production
- Supply chain disruption concerns
- Limited alternative supply sources
🌱 Environmental Trends
With the push to be more environmentally conscious, automotive industry demand continues growing.
- Stricter emission standards
- Catalytic converter demand growth
- Environmental regulation support
- Green technology applications
⚖️ Investment Risks
Keep in mind that palladium is more volatile compared with other precious metals.
- Higher volatility than gold/silver
- Price fluctuations due to supply/demand
- Industrial demand dependency
- Geopolitical supply risks
📊 Investment Considerations
- More volatile than other precious metals
- Heavy dependence on automotive industry
- Limited supply sources globally
- Potential for significant price swings
Understanding these factors is crucial for informed investment decisions.
🎯 Strategic Benefits
- Portfolio diversification among metals
- Inflation hedge characteristics
- Industrial demand support
- Scarcity value proposition
Palladium offers unique benefits within precious metals allocation.
🔮 Future Outlook
- Continued automotive industry demand
- Environmental regulation support
- Supply constraint opportunities
- Technology application growth
Long-term fundamentals support palladium investment thesis.
Investment Summary
Palladium presents a unique investment opportunity as the rarest precious metal with strong industrial demand fundamentals. While more volatile than gold or silver, its supply constraints and automotive industry dependence create compelling investment dynamics for portfolio diversification and growth potential.
Disclaimer: This guide is for educational purposes only and should not be considered financial advice. Palladium investments involve risk, including potential loss of principal. Past performance does not guarantee future results. Always consult with qualified financial advisors before making investment decisions.