Well-known throughout history as symbols of wealth, and commonly recommended by experts as hedges against volatility, precious metals are a key asset in many people’s portfolios.
For many people, that typically means gold or silver. After a recent record-breaking run, gold and silver have been in the spotlight of a lot of news coverage.
However, they are not the only metals that fall into the category of “precious metals.” What many people may be overlooking are platinum and palladium. In fact, like gold, palladium has also seen new record highs in 2020 and has crossed the $2,000 mark within the past 12 months. However, its journey upward began a few years ago.
Five years ago, palladium traded at $618 an ounce. It recently traded at $2,127 an ounce.
The price of palladium has been steadily accelerating over the past few years. In 2019 alone, palladium’s price rose 54% according to CNBC. This increase was driven by a demand for usage in catalytic converters required for cars in the EU and China, as well as a supply squeeze, as already limited sources in South Africa and Russia were facing difficulties. These twin forces of limited supply and high demand have boosted the metal’s price exponentially.
Then there is platinum. Platinum, like palladium, is also in demand for industrial and manufacturing use, including some auto manufacturing use. The recent pandemic has slowed manufacturing and industrial demand for both of these metals. However, this hasn’t snuffed out demand for the metals. In fact, this could prove to be advantageous for those thinking about purchasing either palladium or platinum.
The current slowdown in auto manufacturing provides a prime buying opportunity for these precious metals.
As global manufacturing picks up in future years, the need for these metals could increase, potentially pushing the price of these metals even further upward, making now an ideal time to add them to portfolios. In fact, a recent Reuters poll found that many traders believe both palladium and platinum will see accelerated growth in 2021 after car manufacturing picks back up.
If palladium’s price gets kicked back into high gear with a global recovery, palladium could be the ultimate addition to a precious metal’s portfolio in order to “hedge a hedge.”
It is a shame that both of these metals have flown under the radar of many people who are building their family’s wealth, as they could make excellent additions to their portfolios with palladium and platinum. When you are considering what you use to hedge your portfolio, don’t overlook palladium.
