A large proportion of investors, even those who buy precious metals like gold and silver, have never even heard of the oft-forgotten fourth precious metal, palladium.
Even its sister metal, platinum, is much more widely recognized. It was once fairly popular for high-end jewelry and, until recently, was historically more expensive than gold.
However, now that palladium prices have been on a tear, more people are beginning to take notice!
In fact, palladium is beginning to approach price parity with platinum. As recently as 2014, platinum was actually twice as expensive as palladium. Now, the spread between the two metals is roughly just $50 per ounce, with both metals trading above $900/oz.
Based on trading on the futures market, palladium has actually been the world’s best-performing commodity so far this year. Since 2017 started, the metal is up over 35% year-to-date! It has also rallied to a 16-year high.
There is a lingering question about why is the palladium market so hot right now? There is some indication that palladium has been seeing greater use in automobiles, which would come at the expense of platinum. (Both metals are used in catalytic converters.)
Another explanation is potentially shifting investors tastes. Platinum and palladium are actually much scarcer in the Earth’s crust than gold, and they’re also more costly to extract from the ore. Not to mention that, like silver, much of this available palladium is used up by industry rather than held as an investment. In some sense, the markets may simply be correcting for these realities.
Whatever the case, palladium is still not widely known, so investors may buy palladium as a contrarian play. This is particularly true if you already hold a considerable amount of gold and silver in your portfolio and would like to diversify among the precious metals themselves.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.