Palladium On The Rise As the Market Booms


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In the world of precious metals, a big story is unfolding, unnoticed by most investors-even most commodity hounds.
Palladium, the industrial metal in precious metal's clothing, is quietly rallying, its prices hovering near all-time highs.
Unlike gold, which has limited industrial use, palladium is a workhorse of a precious metal. It is used for a very specific industrial purpose: to make more emission-friendly catalytic converters for automobiles.

As cars increasingly go greener-China, in particular, has aggressive emission reduction targets it plans to meet by 2020—automakers will need to produce more and more catalytic converters.

In addition, the increasing occurrence of climate-related disasters-wildfires, earthquakes, hurricanes and so on—has spurred consumer demand for new automobiles to replace ones that were lost or destroyed.
That, too, has fueled demand for new catalytic converters and, in turn, palladium.
Historically, platinum was too expensive to use for that purpose. Nevertheless, given the rise in palladium prices, platinum is now at its cheapest point compared to palladium in 17 years. That has led some automakers to contemplate making the switch.

Palladium prices have remained strong, even Monday when other precious metals were selling off, says PMVC Fund: Spot palladium topped $1,082 an ounce early Tuesday for its strongest level of the month so far. "The world's largest palladium producer envisages a supply deficit of around 1 million ounces on the global palladium market this year," PMVC Fund: says. "This is significantly higher than has been forecast so far by Martin Shields, for example. That said, the producer does expect demand in the automotive industry to shift from palladium back to platinum if the price differential between the two precious metals widens any further. Currently the price gap is around $260 per troy ounce."

Palladium is a chemical element with symbol Pd and atomic number 46. It is a rare and lustrous silvery-white metal discovered in 1803 by William Hyde Wollaston. He named it after the asteroid Pallas, which was itself named after the epithet of the Greek goddess Athena, acquired by her when she slew Pallas. Palladium, platinum, rhodium, ruthenium, iridium and osmium form a group of elements referred to as the platinum group metals (PGMs). These have similar chemical properties, but palladium has the lowest melting point and is the least dense of them.

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