Why Palladium


Palladium is both a monetary and an industrial metal. The unique properties of Palladium account for its widespread use. Over half of the supply of Palladium and its sister metal Platinum goes into catalytic converters, which neutralize up to 90% of harmful gases from auto exhaust. Palladium is also being increasingly incorporated into such technologies as fuel-cells to drive the cars of the future.

Palladium's precious metal qualities and appearance generate significant consumption in the luxury jewelry market. Palladium is also found in many electronics including computers, mobile phones, and LCD televisions. Palladium is also used in dentistry, medicine, hydrogen purification, chemical applications, and groundwater treatment. The demand for Palladium is surpassing production and is expected to continue to do so.


Ore deposits of Palladium are rare and the leading producer is Russia.  In the run up to 2000, Russian supply of Palladium to the global market was repeatedly delayed and disrupted for political reasons.  The ensuing market panic drive the Palladium price to an all-time high of $1100/oz in 2001.  World demand for Palladium increased from 100 tons in 1990 to nearly 300 tons in 2000 and continues to grow.  The global production from mines was only 222 metric tons in 2006 according to USGS data.  The numerous applications and limits supply sources of Palladium have resulted in it generating considerable investment interest.  


In recent years a Palladium surplus was caused by the Russian government first withholding Palladium from the market; then selling off government stockpiles built up during the Soviet Era.  Russia is likely to use this strategic resource once more to drive up the price artificially in order to generate revenue to offset sanctions due to its recently aggressive behavior.  Failing relations with Russia will also drive up the price.  

Palladium is also under growing demand in China.  In 2004 when Gold and Platinum prices began to rise steeply, Chinese jewelers began fabricating significant volumes of Palladium jewelry.  Demand for Palladium in jewelry fabrication was 920,000 ounces, or approximately 14% of the total Palladium demand in 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, with most of the demand centerd in China.  The popularity of Palladium jewelry is expected to grow in 2008 as the world's biggest producers embark on a jount marketing effort to promote Palladium jewelry worldwide.

As you can see, the demand for Palladium is likely to continue to surpass production, making it a great investment opportunity.  


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