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Palladium is one of 31 transitional metals and a member of the Platinum Metals Group. Because of its popularity, myriad of uses and its common occurrence along with other precious metals, palladium metal is also a good investment.
In this article we will discuss what palladium precious metal is, where it is found and what uses it has. We will also cover its value, investing options where to invest and the pros and cons of investing in palladium.
What is Palladium?
Palladium is a rare transitional metal that is part of the Platinum Metals Group along with platinum, iridium, rhodium, rhuthenium and osmium. Of the group, palladium has the lowest meting point and is the most malleable.
Palladium was found in 1802 by William Wollaston who met with critiques and controversy over the elements authenticity. It was named a month after discovery by Wollaston for the Pallas asteroid that was discovered a few months prior.
The precious metal has a low melting point and is extremely malleable which makes it good as a plating for gold, or in combination as an alloy with other metals. It was once used to treat tuberculosis and can still be found used in dentistry today.
Palladium is a semi-rare precious metal found in the Earth’s crust as a free metal alloyed with other precious metals such as gold. Palladium has also been discovered as a by product of nuclear fission, however due to the high levels of radioactivity, there is no known method of harvest from the nuclear waste.
Russia holds the majority stake of palladium mining with about 45% of the world’s excavation. South Africa and some smaller portions of North America also hold shares in palladium mining. The uses for palladium are numerous, with the most demand from the automotive industry due to the precious metal’s ability to speed hydrogenation and dehydrogenation.
What is the Value of Palladium?
Palladium has a high level that has seen drastic increases over the last few years. Supply and demand are the most critical in determining the metal’s value. Rarity, uses and import/export pricing all play a part in the overall value of palladium.
While osmium holds the point for least abundant of the precious metals group, palladium sits about in the middle. It is less common than platinum which adds to it’s value.
Mining the metal and separating it from the alloys is not overly difficult like it is with osmium or iridium and palladium can be readily available shortly after excavation. However, because there are few mining areas for palladium the scarcity can occur at any time.
The United States, followed closely by China, have the highest demand for palladium which is used in automotive manufacturing. The export prices from Russia and South America can have an effect on the availability of the precious metal to those locations.
In the year 2000, for example, political issues prevented Russia from meeting export demand and the price rose to over $1100 USD per troy ounce. Fearing there would be a shortage and cause adverse effects to the automotive industry, Ford Motor Company stock piled the metal to prevent the shortage.
In 2001 when the political issues were resolved, the prices dropped and Ford lost over 1 billion dollars.
Usage directly corresponds to supply and demand. Palladium has a very high useage rate and is found in many industries. As mentioned earlier, the automotive industry has a high use for palladium and it’s effects on engine exhaust.
Because of the rapid hydrogenation and dehydrogentation properties, palladium is used to make catalytic converters. This use cuts automotive emissions and is the top use for palladium.
Jewelery also uses palladium. Because if binds well with gold, palladium is an alternative to platinum for creating white-gold. This is due to palladium’s natural white tint. Platinum must be plated with rhodium to give the white-gold appearance.
Fountain pen nibs which are usually made with gold, will often be accented or plated with palladium to give the white gold appearance or to distinguish the accent from the gold.
Palladium also has uses in other industries as well. Electronic companies use palladium to make electrodes and it can be found catalyzing carbon monoxide inside carbon monoxide detectors.
The palladium metal is also used in dentistry to make amalgam fillings less corrosive and have a metallic sheen. Palladium can also be found in platinotype photography as well as a hydrogen storage alternative.
Value of Palladium
Since 2015 the cost of palladium has more than doubled, reaching well over $1100 USD, which is rivaled only by gold in the precious metals value race. The demand for palladium continues to rise without an increase in supply. This causes a drastic price increase that is not likely to soon fall.
With the current value so high, it may be difficult to invest in right away. However, If it is possible it is advised.
Should You Invest in Palladium?
With the prices of tungsten and platinum changing so rapidly, the firm structure point of palladium makes it a top contender for investment portfolios. Any time you can add precious metals to your portfolio you add less volatility and risk to help stable your portfolio.
As with any investment there will always be a risk. However, there are methods of investing that can help prevent a fall out. You should always keep an eye on your portfolio, palladium, just like gold, can bring great returns, but left unchecked could lead to ruin.
Palladium is traded world wide, around the clock. It is one of the four precious metals that are. Gold, silver and platinum are the other three. As such, there are plenty of investment opportunities and options available.
Electronic Trading Funds (EFTs) are common with the top four precious metals. They offer both value and high return since they can be traded at the market daily.
Another option is palladium bullion. You can get bullion in palladium bars, coins or currency. The downside to this, like with any other bullion, is storage. Having the metal on hand is a security risk, however, since it can be stolen or lost.
Certificates are another option, however, they lose popularity with a lot of investors because they have no monetary value is something catastrophic were to happen. Doomsday Preppers and other catastrophe believers will not use certificates since they cannot be exchanged for currency.
One other popular option is stock trading on production and mining companies. Palladium, being mined in North America is also on the New York Stock Exchange, as well as other worldwide exchanges. A few of the stock option companies are:
- Norilsk Nickel (OTC: NILSY); who produce powder and ingots in palladium.
- Platinum Group Metals (AMEX: PLG); who do daily trades in all precious metals.
- Stillwater Mining (NYSE: SWC); North America’s largest palladium miners.
- North American Palladium (NYSE: PAL); Canada’s largest miners of palladium.
Where To Invest
Most palladium and other precious metal investments will be done through the stock exchange with or without a broker. EFTs and Stocks will be traded daily on the New York Stock Exchange and around the clock in worldwide exchanges.
You can also find dealers in some larger cities that will sell and purchase palladium bars, ingots and coins. There are researchable databases available online as well as Internet retailers that sell palladium bullion, ingots, coins and goods.
Where and how to invest are left up to the investor, however, it is usually advisable to add precious metals such as palladium to a portfolio. This is especially true if the portfolio is risky, subject to volatility or otherwise struggling.
Pros of Investing in Palladium
Palladium investments are on the rise with no clear signs that it will slow down. New uses are being found regularly, since most of the PMG elements can be exchanged with each other to varying degrees of reliability. Some of the more promising reasons are:
- Steady increase in value over the last three years.
- With platinum prices fluctuating, palladium steadily finds new uses.
- Supply cannot keep up with demand.
- The ability to have bullion is available.
Cons of Investing in Palladium
Sometimes, even precious metals have their downsides. Here are a few of the cons for palladium:
- Supply is low which makes acquiring bullion or ingots difficult.
- It has a high starting price that may not be reachable for all investors.
- When platinum values drop drastically, palladium could end up in a surplus.
Palladium precious metal is a constant traded, high value investment opportunity with a good return. As with most precious metals like gold, silver and platinum, if is advised to add palladium to your portfolio.
Having precious metals in a risky portfolio will even it out and allow for a more stable and lower risk outcome.