Palladium Prices

Palladium is one of the platinum group metals (PGMs) alongside ruthenium, osmium, iridium and rhodium. More than a quarter of all goods produced today contain one of these metals. Palladium is especially valuable for its use in the automobile industry. Palladium is very difficult to extract, as large amounts of nickel and copper ore must be processed to obtain only a small amount of palladium. The other metals processed with the palladium help make the process profitable. [5]

Relatively new to the investment scene, palladium is an intriguing option that’s worth investigating further. Learn more about the history of palladium to get a better understanding of where this metal is likely to go in the future.

Factors Influencing the Price of Palladium

Palladium is unique from other precious metals in that its industrial uses are far greater than its investment opportunities. However, when considering a precious metal for purchase, it’s worth making a note of one that’s purportedly been stockpiled in Russia and China for its usefulness.

If you’re interested in investing in palladium, there are several factors that you’ll want to consider as you identify the right timing for a purchase. The price of palladium is influenced by:

  • Industrial demand: Palladium is an industrial metal above all else, which makes it a weak hedge in a monetary crisis. Demand within the automobile industry, which relies heavily on palladium, can have a dramatic impact on prices. [1] In an economic boom, palladium is more likely to see an increase in demand, while demand in a recession will likely fall.
  • Investment demand: Palladium is increasingly emerging as an intriguing investment opportunity. It has little correlation to stocks, bonds and other assets. Palladium has even been seen to act in opposition to other precious metals, making it a good choice for diversification. [9] Palladium’s value will potentially rise if dollar values decline.
  • Rarity: Palladium is 15 times rarer than platinum and 30 times rarer than gold, making it the rarest precious metal. [4] Opportunities to trade palladium are rare as well. Though it’s available on the New York Mercatile Exchange (NYMEX) and Tokyo Commodity Exchange (TOCOM), palladium is not listed on the London Metal Exchange (LME). [5]
  • Supply: 84% of the world’s palladium is produced in just two countries. Russia supplies 44% of the palladium in the world, and South Africa supplies 40%. In comparison, the United States produces just 5% and Canada 6%. [8] As seen in 2000, prices are greatly impacted by moves made in Russia and South Africa.

The History of Palladium

Palladium’s history is far shorter than that of other precious metals like gold, silver and platinum. Palladium’s discovery came later in history, and it took nearly 200 years for this metal’s true value to emerge. Consider these key moments in the history of palladium:

  • 1803: Palladium was first discovered by chemist William H. Wollaston, who sold the metal to a mineral dealer as ‘new silver.’ [5]
  • 1805: Wollaston announced his discovery to the Royal Society of London to disprove claims that it was merely a platinum-mercury alloy. [5]
  • 1939: Palladium gained a foothold in the jewelry industry as an alternative to platinum. Platinum was declared a strategic government resource for WWII at the time, so jewelers moved to this more readily available alternative. [6]
  • 1989: Manufacturers began using palladium as a more affordable alternative to platinum in converters. [1] This brought palladium out of obscurity and caused a slow rise in prices.
  • 2000: Russia struggled to bring an adequate supply of palladium to market and speculated on retaining, rather than selling, its reserves. The price of palladium subsequently rocketed to $1,100 per troy ounce. [3]
  • 2001: The price of palladium fell, and Ford lost nearly a billion dollars because it had been stockpiling the metal against a shortage. [5]
  • 2008: Interest in precious metal investments increased, and palladium’s prices began to rise again. [9]
  • 2009: Palladium gained its own hallmark in the jewelry industry, though the hallmark wasn’t a requirement until the next year. [11] In 2009, 38,360 pounds of palladium were used just to make jewelry in China. [4]
  • 2017: Palladium’s price per ounce rose above platinum’s price for the first time, as demand increased. [9]
  • 2018: The global palladium market ran at a deficit of 600,000 ounces. Some anticipate that this will continue to rise to 800,000 ounces. [10]
  • 2019: Palladium’s prices continued their upward trend, eclipsing the price of gold. [9]
  • 2020: The projected palladium output fell short of the demand for this metal for the ninth year straight. [11]

The Value of Palladium

Understanding the many and varied uses for palladium will help you better judge this metal’s price and investment potential. This is a unique choice for any portfolio because one can readily see how a variety of global industries could impact the price of palladium and cause it to rise.

Automobile manufacturers use about 80-85% of the palladium on the market. This palladium is used in catalytic converters for car exhausts. Palladium turns various pollutants into carbon dioxide and water vapor, making it a valuable element in today’s eco-conscious market. China is tightening regulations on automobile pollution, and demand for gas-powered vehicles is growing in Europe, all of which creates a greater demand for palladium. [1, 7]

Though it didn’t catch on immediately, palladium has steadily gained interest in the jewelry market. Palladium jewelry is 95% pure. It’s 12% harder and 40% lighter than platinum. [6]

Palladium has been used in numerous other industries for: [1, 2, 3]

  • Watchmaking
  • Dentistry
  • Surgical instruments
  • Hydrogen purification
  • Petroleum cracking
  • Computers
  • Chemical transformations
  • Groundwater treatment
  • Fuel cells
  • Capacitors
  • Photography

If you’re interested in investing in palladium, there are several options available to you. You can purchase palladium bars, bullion and coins. You can also purchase palladium futures contracts in the hopes of benefiting from future changes in palladium prices. Stock in palladium mining and production companies or ETFs that track palladium offer entry into this market as well. Consider your approach carefully to yield the greatest benefit from your exposure to palladium.


Article Sources

1. Live Science. ‘Facts About Palladium,’ https://www.livescience.com/36991-palladium.html. Accessed October 23, 2020.

2. Royal Society of Chemistry. ‘Palladium,’ https://www.rsc.org/periodic-table/element/46/palladium. Accessed October 23, 2020.

3. Forbes. ‘What Russia Means to Palladium Prices,’ https://www.forbes.com/sites/kenrapoza/2012/02/03/what-russia-means-to-palladium-prices/#7fdaa80f1d0f.. Accessed October 23, 2020.

4. Finanz. ‘A Brief History of Palladium,’ https://finanz.dk/a-brief-history-of-palladium/. Accessed October 23, 2020.

5. Agiboo. Palladium, https://www.agiboo.com/commodity-knowledge-center/commodities/palladium/. Accessed September 2, 2020.

6. Sorella Jewelry Studio. Palladium – The New Star of Luxury Jewelry, https://www.sorellajewelry.com/palladium-jewelry-s/458.htm. Accessed September 2, 2020.

7. Harriet Kelsall. Palladium a Bit of History, https://www.hkjewellery.co.uk/articles/palladium-a-bit-of-history. Accessed September 2, 2020.

8. Investing News. ‘5 Top Countries for Palladium and Platinum Production,’ https://investingnews.com/daily/resource-investing/precious-metals-investing/platinum-investing/top-platinum-palladium-producing-countries/. Accessed October 23, 2020.

9. Aberdeen Standard Investments. ‘Precious metals’ place in a portfolio,’ https://www.aberdeenstandard.com/docs?editionId=20de5b25-5e53-439b-b4e5-871b3d1eb17.. Accessed October 23, 2020.

10. Yahoo. ‘Why Palladium ETF Has Soared in 2019,’ https://www.yahoo.com/now/why-palladium-etf-soared-2019-230011955.html. Accessed October 23, 2020.

11. The Washington Post. Why Palladium Is Suddenly a More Precious Metal: QuickTake, https://www.washingtonpost.com/business/energy/why-palladium-is-suddenly-a-more-precious-metal-quicktake/2020/01/20/b4983110-3bd1-11ea-afe2-090eb37b60b1_story.html. Accessed September 2, 2020.