View Full Version : Palladium: The Forgotten Precious Metal That Your Portfolio Needs

28th April 2010, 09:05 AM
Palladium: The Forgotten Precious Metal That Your Portfolio Needs (http://www.dailymarkets.com/stocks/2010/04/28/palladium-the-forgotten-precious-metal-that-your-portfolio-needs/)

By Tony D’Altorio on April 28, 2010

Silver… gold… platinum… Now those are the precious metals investors want to get their hands on.

But palladium? Well, few people care about that one, if they even remember it exists.

Yet despite the public snubbing, palladium has outperformed its flashier relations over the past 15 months. Rising 35% since the start of the year, it’s fast approaching its two-year peak of $590 an ounce that it hit in March 2008.

In fact, apart from seven days during February and March 2008, it’s trading at its highest level in nine years.

Thanks to dwindling supplies and two key sources of demand, prices have soared.

The Palladium Market’s Driven by Auto Demand

The auto industry accounts for about 60% of palladium consumption. And this year has seen large increases in vehicle production in leading countries after last year’s collapse.

Consultancy firm PriceWaterhouseCooper highlighted the sector’s progress in January and February. It found that production rose by double-digits year-over-year in nine of the world’s biggest vehicle markets.

Those nine markets make for about two-thirds of global light vehicle production.

China and the United States helped boost those numbers especially with increased demand. U.S. auto sales rose 24% in March compared to the previous year, while China experienced a 56% increase up to 1.7 million vehicles.

Both countries use mostly gasoline-powered cars and trucks, which require catalytic converters made with palladium. In contrast, Europe runs mostly on diesel, catalytic converters and platinum.

Forget Gold, Silver and Platinum… Palladium Makes the Best Bling

The jewelry, electronics, chemicals and medical markets all require palladium as well. So the precious metal has it made out nicely as Asia boosts its intake of such expenditures.

And even though investors traditionally prefer to buy into gold, silver and platinum, even that is changing with the launch of new, physically backed Exchange Traded Funds. ETF holdings of palladium are at a record high, up 50% from the beginning of the year alone.

For example, the ETFS Physical Palladium Shares (PALL: 54.41 -0.36 -0.66%) just launched this year in the U.S. As of February, it already had 430,000 ounces of the metal to its name.

During that same month, palladium ETFs around the world held about 1.7 million ounces. That comes to over 23% of 2009’s estimated global supply.

Palladium’s More Precious… Thanks to a Dwindling Supply

Palladium is a fairly rare metal, with global production coming in a mere tenth of silver mining.

On the plus side, it can be found in ores with other platinum group metals. But palladium production comes mostly as a byproduct of nickel mining. This makes increasing supply difficult, not to mention highly dependant on economic conditions surrounding nickel.

Palladium’s geographical concentration also poses a challenge. According to the U.S. Geological Survey, Russia provides over 40% of the metal. South Africa stands as a close second, while Canada and the U.S. supply most of the rest.

In South Africa’s case, it actually has ten times the palladium reserves that Russia does. It just can’t tap much of it without a reliable power grid, as many of the deposits are found over a mile below ground. And analysts estimate that there may not be any real increase to generating capacity until 2013.

That leaves Russia’s Norilsk Nickel ADR (OTC: NILSY) as the world’s largest nickel miner, not to mention the leading palladium supplier. But even it is changing focus to mining ores rich in nickel but poor in palladium.

That could be a strategic move, considering how it publicly stated that the precious metal’s prices should trade somewhere between gold’s $1150 per ounce and platinum’s $1735 an ounce. That probably indicates the company won’t be supplying larger amounts of palladium anytime soon.

Over the last decade, the market derived much of the commodity from Russian stockpiles built up in the 1970s and 1980s. However, that supply looks like it’s winding down. If true, that means that the overhang plaguing the metal for the past decade would be gone.

Sales from those stockpiles dropped off sharply in 2009. And global production of the metal declined by 4.4%. This may have caused the palladium market to slip into a structural deficit last year. And it looks likely to continue in 2010, as production from previously shuttered mines still lags demand.

Profit from Palladium With These Investments

Investors have several ways to profit from the price rise in palladium, including the aforementioned ETF, PALL, which holds physical palladium.

Meanwhile, North American Palladium (AMEX: PAL) and Stillwater Mining (AMEX: SWC) represent direct plays on the metal. They’re the only two known primary palladium producers in the world.

Palladium has come a long way in a short time, so it should be in line for a correction soon. When that happens, consider it an opportunity to establish a position for the metal’s run in the years ahead.

Good investing,

Tony Daltorio

21st June 2014, 10:40 AM
Dr. Yasuhiro Iwamura of the Advanced Technology Research Center at Mitsubishi Heavy Industries of Japan recently presented groundbreaking successes at a conference at the Massachusetts Institute of Technology (MIT). His new process (see schematic below) uses a permeable palladium film to transmute radioactive cesium into praseodymium.

Praseodymium is a rare earth element used to produce high strength metal for aircraft engines; it is also used as a UV absorbing colorant in glass, and boosts the performance of neodymium in magnets, which are used in electric motors.

Wednesday June 18, 2014 11:44

read more at:
Color Illustrated Schematic (http://www.kitco.com/ind/Albrecht/2014-06-18-Palladium-Used-To-Transform-Radioactive-Waste-Into-Rare-Earth-Element.html)

21st June 2014, 07:25 PM
I wanted to pick up some Palladium when it was ~ $200 per oz -- but where in the heck do I get it?