After palladium surpassed the price of gold in 2018 and reached its highest-ever prices in 2019, investors are now starting to understand the benefit of having palladium in their precious metal investment portfolios. This article focuses on why palladium is an important investment metal and some interesting facts about it.
Palladium belongs to the platinum group metals (PGM) together with platinum and rhodium. It was discovered by William Hyde Wollaston in 1803 and was named after the asteroid 'Pallas'. Palladium remains a specialist metal and prices correlate strongly to industrial demand.
1. All-Time Price Shifts
As the world’s palladium supply is mainly controlled by a couple of countries, prices can be more volatile than other precious metals. Below is a look at how palladium prices have performed over time. Palladium reached an all-time low of £43.55 in August 1992 and an all-time high of £1,385.21 at the time in writing (October 2019). The below price (GBP) chart demonstrates the peaks and troughs of this precious metal since the start of the nineties:
2. Recent Price Shifts
Palladium's increase in price has been considerable over the past 3 years. From October 2016 to October 2019, palladium saw a phenomenal 262.37% increase in price, from £520.99 to £1,366.91. The below price (GBP) chart shows palladium's price moves during that time:
3. Future Prices
Palladium is both a precious and an industrial metal, much like silver and platinum. The New York Times has recently reported that 80% of palladium is now being used for catalytic converters in cars. This is significant for the future price of Palladium, as its scarcity and demand are key fundamentals to look out for, that could be driving its price higher. Palladium is also used in dentistry and electrical circuitry so industrial uses for the metal are still rising.
Increased global demand means that prices should continue to increase. As China and developing countries also enforce stricter auto emission limits and diesel cars are phased out, palladium is also becoming more in-demand than ever.
Did you know - 'White Gold' is made from mixing gold with palladium?
Additionally, the rise in popularity of 'white metals' over the last decade has created a unique opportunity for palladium jewelry. This trend is strongest among the latest generation of fine jewelry consumers. The primary reason platinum rings are more expensive than palladium rings is that platinum is much denser than palladium (almost twice as much). This means to make the same ring, you'd need to use a lot more grams of platinum than grams of palladium, giving the same look and feel at half the price.
4. Rarest metals on earth
The bulk of the world's palladium is mined in Russia (41%) and South Africa (38%). Palladium is roughly about 15 times rarer than its sister metal, platinum. Canada, US and Zimbabwe are other major producers, but a decrease in production would be a huge contributing factors to price spikes. Going from past trends over the last decade, there has almost always been a palladium supply deficit, so will we never mine more than we need?
Did you know - Palladium is 30 times rarer than gold?
5. Alignment with Platinum
Platinum and palladium’s rarity, coupled with the growing uses of the two metals, makes for great investment potential. As with all precious metals, both faces its own round of volatility, but historically, platinum and palladium prices have been closely aligned.
The platinum-to-palladium ratio is the price of platinum divided by the price of palladium and is a key indicator for a trading opportunity for investors. When the ratio is high, it indicates that palladium may be oversold and present a buying opportunity, and when it's low, it means that palladium may be overbought and reflect a selling opportunity.
As one can see, since 1990 the price ratio of platinum and palladium has varied between 0.6 and 5.3. The average was 2.8 as palladium was a cheaper substitute for. More recently, however, this has changed, with palladium xxx. The graph below shows these trends in a long-term view.
6. Types of Palladium Bullion
Whether you’re a beginner or an experienced investor, it’s important to know all the pros and cons of each investment you make, to ensure you’re investing your money optimally. If you're looking to add physical palladium bullion to your precious metal collection, there are a number of different options available to you. Like all investments, there are advantages and disadvantages to owning large and small bars or coins so, as always, we recommend that our clients conduct their own thorough research before doing so.
Most popular palladium bullion in the UK:
- 1oz Palladium Canadian Maple Leaf Coin
- 1oz Baird & Co Minted Palladium Bar
- 50g Baird & Co Minted Palladium Bar
- 100g Baird & Co Minted Palladium Bar
- 250g Baird & Co Minted Palladium Bar
- 500g Umicore Minted Palladium Bar
It is worth noting that Palladium is subject to VAT so look for deals to reduce this impact by buying pre-owned bars and coins or ask about our off-shore storage options for palladium purchases.
So, why not take a look at current investment opportunities in Palladium? If you'd like to talk through any options available to you, call or email Bleyer on 01769 618618 or email [email protected]