Palladium
Performance
Palladium is an investment that simply cannot be ignored. Palladium has proven itself as a dark horse commodity that has so far passed under the nose of many investors. In 2010, Palladium was the precious metal whose value increased the most. It had gains of over 95 percent, providing some investors with very meaty returns. By the beginning of this year, the metal had earned its clout, demanded attention in its own right and was predicted to soar and bring more meat to the investors’ table.
Demand and Supply
One reason for this spike in price is that demand is currently outpacing supply. Russia was once one of the world’s largest producers of the metal, and used to stock pile palladium in order to maintain a stable market price. However, Russia is believed to have sold its major reserves. Palladium mines are deep and expensive to run. This only adds to the low-supply situation, as a lot of companies that mine this metal have a difficult time generating positive cash flow. Strong industrial demand for palladium coupled with very limited mine supply growth has attracted a considerable amount of investment interest in the metal. Along with platinum, palladium is used to manufacture catalytic converters for automobiles. Catalytic converters reduce the toxicity of automobile emissions. Since the auto market has begun to rebound from the recession, more palladium will be needed for vehicle production. Palladium has several other specialized uses, such as dental construction, electronic resistors, catalysts for various chemical applications, and jewelry.
Why invest
The United States of America once had a fairly sized strategic stockpile of platinum and palladium, but for some reason sold out some years ago. No other country besides Russia has any stockpile of palladium at all. That Russian stockpile is not an infinite supply; it could come to an end. We would then see a structural deficit in palladium. It is expected that growing demands coupled with low supplies will continue driving the price higher.