Among the four precious metals, palladium has shown the strongest performance, and its market fundamentals are upward scaling. The chronic deficit of the palladium market is a major determinant of its upward price movement. Palladium has seen a year-to-date rise of almost 13.5%, which is higher than the increase in platinum, silver, and gold as of February 9, 2017.
In 2016, palladium was underperforming its precious metal peers, but now it’s outperforming them. The call implied volatility for palladium, which measures the change in the price of a call option with the change in the price of an asset, is close to 30.6% over the past one month.
What the ratio stands for
Gold‘s performance compared to palladium‘s according to the gold-palladium spread, or the gold-palladium ratio. The spread measures the number of palladium ounces it takes to buy a single ounce of gold. The higher the ratio, the weaker palladium is compared to gold because more ounces of palladium are needed to buy an ounce of gold.
The gold-palladium spread has seen its ups and downs over the past few months. However, once again, palladium is overtaking gold. The spread fell substantially during the last quarter of 2016.
Source: Market Realist