Why such a large premium on Palladium?
cars
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Palladium seems to carry a 15-20% Premium. Why is this when other PM's Premiums are Much lower?
Its all relative
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When palladium spiked to about $1,000 a few years ago, the car companies had just embarked on a program to implement greater use of palladium instead of platinum. This increase in demand caused palladium to start moving up, and then the Russians decided to milk the market for even higher prices by holding back on supply.
That caused the car companies to re-think their strategy and when the car companies reverted back to platinum, the price of palladium dropped back. Such is the impact of having unreliable supply partners.
I suspect that the higher premium on palladium is due to wishful thinking by investors who are hoping for a re-play. If platinum gets high enough, the car companies could be tempted with palladium once again. Some speculators, myself included, tend to think that the premium might be worth the wait.
I don't own any palladium, but I'm still thinking about it.
I knew it would happen.
Edited to add I never seen palladium at 1 grand ever not even half that, maybe I missed it.
I too have never seen PD at 1k, I've seen $600 +/-
<< <i>I too have never seen PD at 1k, I've seen $600 +/- >>
I would love it if you let me know when you see Pd at that price again
--Severian the Lame
2001 Palladium Price Peak
Palladium is a rare and lustrous silvery-white metal that was discovered in 1803 by William Hyde Wollaston, who named it palladium after the asteroid Pallas, which in turn, was named after the epithet of the Greek goddess Athena, acquired by her when she slew the giant Pallas.
Futures contracts on palladium are actively traded on the NYMEX Exchange. Palladium is the other major metal of the platinum group. It is mined with platinum, and resembles it in many respects, yet there are important differences between the two metals.
Palladium is also produced as a by-product of nickel mining. Russia supplies about 67% of production, South Africa, 23%; and North America, 8%. Annual production runs approximately 8.1 million ounces.
Automotive catalysts are the largest consuming sector, accounting for 63% of demand. Electronic equipment accounts for 21%; dental alloys, 12%; and jewelry, 4%.
Why investors love Platinum & Palladium ETFs
Palladium, along with platinum, rhodium, ruthenium, iridium and osmium form a group of elements referred to as the platinum group metals (PGMs). Platinum group metals share similar chemical properties, but palladium has the lowest melting point and is the least dense of these precious metals.
When palladium is at room temperature and atmospheric pressure, it can absorb up to 900 times its own volume of hydrogen, which makes palladium an efficient and safe storage medium for hydrogen and hydrogen isotopes. Palladium is also tarnish resistant, electrically stable and resistant to chemical erosion as well as intense heat.
Palladium’s precious metal qualities and appearance generate significant consumption in the luxury jewelry market. Palladium is found in many electronics including computers, mobile phones, multi-layer ceramic capacitors, component plating, low voltage electrical contacts, and SED/OLED/LCD televisions.
Palladium is also used in dentistry, medicine, hydrogen purification, chemical applications, groundwater treatment, and it plays a key role in the technology used for fuel cells, which combines hydrogen and oxygen to produce electricity, heat and water.
Palladium itself has been used as a precious metal in jewelry since 1939, as an alternative to platinum or white gold. This is due to its naturally white properties, giving it no need for rhodium plating. It is slightly whiter, much lighter and about 12% harder than platinum. Similar to gold, palladium can be beaten into a thin leaf form as thin as 100 nm (1/250,000 in).
Like platinum, it will develop a hazy patina over time. Unlike platinum, however, palladium may discolor at high soldering temperatures, become brittle with repeated heating and cooling, and react with strong acids. It can also be used as a substitute for nickel when making white gold.
Palladium is one of the three most popular metals used to alloy with gold, making white gold. Palladium-gold is a more expensive alloy than nickel-gold, but it's naturally hypoallergenic and holds its white color better.
When platinum was declared a strategic government resource during World War II, many jewelry bands were made out of palladium. As recently as September 2001, palladium was more expensive than platinum and rarely used in jewelry also due to the technical obstacle of casting. However the casting problem has been resolved, and its use in jewelry has increased because of a large spike in the price of platinum and a drop in the price of palladium.
Read all the News and Features on Palladium Here!
Prior to 2004, the principal use of palladium in jewelry was as an alloy in the manufacture of white gold jewelry, but, beginning early in 2004 when gold and platinum prices began to rise steeply, Chinese jewelers began fabricating significant volumes of palladium jewelry.
Johnson Matthey estimated that in 2004, with the introduction of palladium jewelry in China, demand for palladium for jewelry fabrication was 920,000 ounces, or approximately 14% of the total palladium demand for 2004 - an increase of almost 700,000 ounces from the previous year.
This growth continued during 2005, with estimated worldwide jewelry demand for palladium of about 1.4 million ounces, or almost 21% of net palladium supply, again with most of the demand centered in China. The popularity of Palladium jewelry is expected to grow in 2008 as the world's biggest producers embark on a joint marketing effort to promote Palladium jewelry worldwide.
Like other precious metals, palladium may be used as an investment. Palladium price peaked near US$1,100 per troy ounce in January 2001 (approximately US$1300 in 2007) driven mainly on speculation of the catalytic converter demand from in the automobile industry. It subsequently fell to US$145 per oz t in April, 2003. As of July 2008, palladium prices are approximately US$381 per oz t.
Recent years' palladium surplus condition was caused by the Russian government selling off government stockpiles built up during the Soviet Era, at a pace of about 1.6 to 2 million ounces a year. The amount and status of this stockpile is kept as a state secret. A traditional way of investing in palladium is buying bullion coins and bars made of palladium.
Available palladium coins include the Canadian Maple Leaf and the Chinese Panda. The liquidity of direct palladium bullion investment is not as good as gold and silver due to low circulation of palladium coins and wider spread between buying and selling price.
I knew it would happen.
I didn't realize that China was using so much Palladium in jewelry but this obviously helps as will the launch of a Palladium ETF which will take quite a bit of the Palladium off the market.
I have accumulated over 200 ounces of Palladium over the past several years and even though I haven't made a killing I still feel it will pay off with my average price just a little above $200 an ounce. Of course in hindsight I should've sold out about a year ago when it got close to $600 an ounce but it's not that easy to locate it and for awhile there was a fairly long wait for delivery.
One other thing that could drive the price is the uncertainty surrounding the Russian stockpile of Palladium, some experts have speculated that the Russian stockpile is either gone or neary gone which of course would remove this negative factor from the market.
That's a 54% premium.
But, you can still get standard bars for as little as 15% over spot.
A 54% premium for Maples is something that really doesn't make sense (to me).
I knew it would happen.