While palladium doesn’t get the same attention as gold, silver or even platinum, its importance as a precious metal has increased thanks to technological advances, but it is also increasingly becoming the focus of investment opportunities.

Palladium at a Glance

Palladium is a key metal for electronic and industrial devices, and is rarer than even gold. It has a gleaming white exterior that at first glance resembles platinum or silver, and in fact belongs to the same family as platinum. But it is distinct, and is relatively “new” to humans as it was first discovered during the 1800s. It is usually accompanied by other metals like nickel, and there are various mining companies that focus on extracting it, especially in Russia and South Africa where it is found most frequently.

Palladium could rightly be called an industrial metal since it is used in many projects, such as the creation of automobile catalytic converters and trapping hazardous emissions thanks to its unique chemical properties. Companies are also using it to manufacture MLCCs, or multi-layer ceramic capacitors. Dentists are also fond of palladium since it can be utilized for the creation of dental bridges and inlays, and beginning in the 1930s, jewelers begin working with palladium on a larger scale.

Palladium Investing

There are at least three ways in which one can get started investing in palladium. The first is buying or selling it via share dealing, which reflects its current spot price, while a secondary option is through futures contract trading. With a futures contract, an agreement will be made between two groups to acquire and then eventually sell the palladium, for a price which is fixed. There are also more advanced investment vehicles such as CFDs or spread bets, which involve derivatives.

CFDs can be acquired on trading platforms through a technique called spread betting where traders can speculate on palladium’s price movements. This technique is popular thanks to its tax efficiency and the fact that traders are able to buy or sell a specific amount of asset units with the price difference being exchanged during the contract’s termination. However, those that like to keep things simple will just buy and hold palladium in its physical form.

What Influences Palladium’s Price?

There are multiple factors which determine the price of palladium, and one of the most important is the automotive industry. For instance, in the European Union most consumers have transitioned from diesel based vehicles to those powered by petrol, which is significant since petrol vehicles rely more on palladium instead of platinum. Another interesting factor that influences palladium prices is the U.S. Dollar.

During periods where the dollar depreciates against other currencies like the Ruble of Russia, palladium producers in Moscow that get their revenue in American dollars might experience a decline in their profit margins. As a consequence, the Russians would be incentivized to lower their palladium production, which would then raise the price of the metal. It should also be emphasized that palladium is usually the byproduct of nickel and platinum, meaning there are times when miners can find it challenging to boost its output and extraction.