PALLADIUM
The Ultimate Insurance
The Ultimate Insurance
Why Buy palladium?
“Just like you’d have various types of assets in a diversified portfolio, [you] can diversify within asset classes. Many [people] think only of gold and silver when it comes to precious metals, but palladium and other metals can add to that diversification,” explains Marc Lichtenfeld, chief income strategist at The Oxford Club.
Palladium might not always be in the spotlight like gold and silver—yet oftentimes its price tops the charts, and this silver-white metal steals all the headlines. What causes the price to fluctuate, and how does palladium compare with platinum, gold, and other precious metals? Learn more about the lasting power of palladium and the reasons you might want to add it to your precious metals portfolio.
What Is Palladium?
Palladium, one of the four most sought after precious metals, is a silvery-white metal that’s a cousin of platinum, ruthenium, rhodium, osmium, and iridium. Palladium comes primarily from mines in Russia and South Africa; it’s a byproduct of platinum and nickel mining.
The majority of palladium that’s mined winds up in vehicles’ catalytic converters. This equipment helps reduce the amount of harmful pollutants released by vehicle exhaust systems. In fact, the automotive industry represents nearly 85% of the global demand for palladium.
Palladium also is found in dental fillings and crowns, jewelry, fuel cells, medical equipment, and devices like laptops and smartphones.
As the demand for these consumer products has increased, so has the demand for palladium. Interest in holding physical palladium in precious metals portfolios has increased, too. Palladium can’t be easily substituted for other metals in its applications, which makes it a beneficial and diverse portfolio asset.
Factors That Influence the Price of Palladium
A couple of factors drive palladium’s price in the precious metals market.
Supply and Demand
First is supply and demand. Palladium prices go up when demand goes up. And since palladium is reportedly 30 times rarer than gold, the supply is extremely limited. In April 2021, analyst Frank Holmes noted that palladium was “facing its 10th successive year of supply falling short of demand,” according to Kitco News.
Auto Industry Changes
Second is the auto industry. As production of vehicles keeps climbing (particularly in Asia), so does the demand for catalytic converters. On top of that, government regulators continue to toughen anti-pollution regulations for vehicles. Since palladium is a critical component in catalytic converters, the automotive sector needs more palladium to make more catalytic converters and thus more vehicles.
Palladium vs. Platinum vs. Gold
Palladium often costs more per ounce than platinum or gold does. Beyond that, the differences include:
- Less palladium is available to be mined vs. platinum and gold.
- Palladium and platinum are commonly used to manufacture catalytic converters, while gold is not.
- Gold ranks as the top choice of metal for most types of jewelry, whereas palladium and platinum are used less often.
While the prices of palladium, platinum, and gold often aren’t in line with each other, these three precious metals do offer the same benefits: They can be hedges against inflation and safe-haven stores of wealth. In addition, all three have currency codes assigned to them by the International Organization for Standardization, or ISO.
Why Add Palladium to Your Precious Metals Portfolio?
The decision to put palladium in your precious metals portfolio ultimately rests with you. But the fact that palladium can diversify your overall portfolio and help protect against risk may convince you to purchase this unique precious metal in the form of legal-tender products.
Types of Palladium for Your Portfolio
You can buy two forms of palladium for your portfolio: bullion bars and bullion coins.
Palladium Bars
Very few mints and precious metals refineries produce palladium bars. Argor Heraeus, PAMP Suisse, Credit Suisse, Scotiabank Valcambi Suisse, and Johnson Matthew Lewis & Clark are a few of these private minting facilities and producers.
The 1-ounce palladium bar is the most common palladium bar size, but you can also find 1-kilogram, 10-ounce, 100-gram, 50-gram, 10-gram, and 1-gram palladium bars for sale.
Palladium Coins
Palladium coins are more accessible for many precious metals holders than palladium bars, and accordingly, there is much more variety. Look for palladium versions of best-selling coins like the American Eagle and Canadian Maple Leaf coins.
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