At MoneyNews: How About Palladium?

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How About Palladium?

By Ed Moy at

When the U.S. dollar dropped due to Federal Reserve Chair nominee Janet Yellen saying that the economy needs to improve more before the tapering of quantitative easing can start, palladium had a mini-rally in both price and demand.

The least known of the precious metal bullion quartet that includes gold, silver and platinum, palladium’s price around $700 is halfway between silver and gold. It might be more rare than gold, but it is twice as affordable. And one ounce of palladium is much more convenient to store than 35 ounces of silver is.

In addition, palladium, like gold, silver and platinum, is used for industrial purposes. For example, it is a key component for catalytic converters for cars. This industrial demand anchors the price so that palladium is not as dependent on financial market demand. That means palladium can be a good insurance policy that counteracts the impact of a drop in the value of the U.S. dollar.

But over half of the world’s supply of palladium comes from Russia, which has sometimes used its control over palladium for political and economic advantages. Another third of the world’s supply comes from South Africa, whose mining infrastructure can be unreliable. Together, these factors can cause large and unpredictable fluctuations in the price of palladium. …

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