Palladium is least known element among the four precious metals namely gold, silver, platinum, and others but it has a significant value since it has numerous industrial uses. In fact, palladium was the world’s best performing metal in 2017 surpassing both gold and silver. It gained more than 55% in the past one year, and this development is likely to continue in 2018.
Palladium is one of the few metals with great importance to the modern economy, but it’s always overlooked by investors who prefer investing in the other famous and more expensive precious metals. There are several reasons why you should consider palladium as an investment today.
In 2017 alone, the total demand for this precious metal shot from 9.4million ounces in 2016 to almost 16million ounces. The highest demand was recorded in the automotive industry followed by industrial and then jewellery. This was no surprise since palladium is primarily an industrial metal that is highly used in the manufacture of vehicles. However, this doesn’t mean that the demand for the metal is going to go down anytime soon.
In fact, there is an expected increase in worldwide automotive demand which will automatically lead to increased demand for palladium. China and the United States play a crucial role in determining the demand for palladium since the two countries use the metal as an essential ingredient in motor vehicle catalytic converters. The jewellery industry which also contributes to palladium consumption has also shown some vibrancy in the recent past.
Palladium Is Scarce
Trusted palladium dealers worldwide are already predicting that the metal’s deficit will most likely double from the 1.3 million ounces in 2017 to about 2.6 million ounces in 2018. The increase in deficiency has the same effect as an increase in demand, and it’s one of the obvious reasons for investing in a commodity. Russia is the world’s leading producer of Palladium and signs indicate that the production of the metal is on a sharp decline. South Africa, the second largest producer of the metal, has been faced with numerous worker strikes forcing the prices of the metal to go higher.
The Inflation Hedge
The pricing of Palladium, just like the other metals is done in U.S dollars meaning that the metal has an inverse relationship to the greenback. For instance, when the dollar appreciates, the precious metals will tend to depreciate since the stronger dollar can purchase more ounces of the metal.
However, it the dollar sinks, most investors lose the purchasing power, and most of them will run to gold which is assumed to be the ideal hedge against inflation. Palladium can also work as an inflation hedge given that the other dollar-denominated commodities tend to respond positively to a depreciated dollar.
How Can You Invest in Palladium?
You can invest in Palladium in four different ways namely ETFs, Futures, Physical metal and in Stocks. You can buy the physical metal from Indigo Precious Metals and store the bars or the metal in a safe place. It’s possible to store a significant Value of the metal in small space but requires secure arrangements.