Investing in rare and precious metals is not a new practice. People have been practicing it for a long time for several reasons, though one of the most common is that it serves as a valuable asset that can compete against currencies. With that said, gold has often been one of the most popular investment choices as it is known to hold its value in the long run. More recently, however, the palladium metal has started to soar in price in the global market. Its price has risen so much that it has become more expensive than gold, turning into one of the most valuable metals available today.
Palladium is part of the platinum metal group and is used for several functions, but the majority of the metal goes to the exhaust systems in cars. Since it mostly goes to industrial use, palladium is not as well-known as the other precious metals, especially as an investment. The sudden spike in price, however, has caused an uproar. Though it is extremely rare, you may be able to find palladium online in a variety of investment options, such as bullions.
What Caused the Price Increase?
Since 2019, futures for palladium had hit record-highs, causing many investors to explore more on the metal and its potential. The performance of the market is mainly driven by the increasing demand from many industries and the lack of supply to address it. Since palladium is heavily used in the automotive industry as a catalytic converter for cars, it is constantly in a deficit. Government regulations to control the pollution emitted by vehicles have also become stricter, triggering increased demand for palladium.
Given that palladium is a secondary product of other metals, like platinum and nickel, it is much harder to procure. At the same time, miners do not have as much flexibility in controlling their palladium output despite the increase in price. Since the output is limited, the metal is scarce and hard to come by.
Why Invest in Platinum?
Though palladium is not the typical first choice of investors looking into precious metals, there are several reasons to start considering this to your portfolio. Whether you are looking for palladium online or through physical sources, it helps to familiarise yourself with the metal before making an investment.
Naturally, one of the reasons why palladium is a worthy investment is that its price has been rising stably due to market economics. As demand continues to increase, its price is likewise expected to rise due to the limited supply. Do note, however, that palladium is just as volatile as any other precious metal. Thus, you should continuously monitor its performance in the market to observe price trends over time.
- Inflation Hedge
Similar to other metals, palladium can also be used as an inflation hedge to protect the value of your currency. Thus, if inflation occurs in the economy, you can be better prepared since palladium can hedge against it.
- Automotive Demand
With tightening regulations in countries like China and the United States, it is no doubt that the palladium demand will keep increasing. As a result, you can use metal as a way to play rising auto sales. As long as automotive demand continues to grow, car companies will continue to use palladium for catalytic converters.