I have invested in palladium from time to time in the past. I just dabbled a bit here and there but the market now just seems crazy. In case you haven’t been watching lately palladium has exceeded the price of gold!
Palladium (Pd) is a by-product of nickel, copper and zinc refining usually. It is mainly used for catalytic converters. It is sometimes alloyed with gold to form white gold. Other uses are in ceramic capacitors for electronic devises and for the purification of hydrogen gas.
Palladium is almost always cheaper than platinum. A quick search of the Pt : Pd ratio shows that in the last 30 years or so there was only a short period around 2000 when palladium was more expensive. The ratio now is around 0.63 which is quite odd and close to a 30-year low of about 0.5. (The Pt : Pd ratio has averaged around 2.5 for the past 30 years.)
Palladium is normally cheaper than gold as well. Recently it has gone above the price of gold which again is quite unusual.
Platinum (Pt) is also a by-product of nickel and copper. South Africa produces 80% of the world supply followed by Russia, Zimbabwe and the US. It is also used for catalytic converters, jewelry and industrial uses.
In most instances palladium is used in catalytic converters whenever platinum gets too expensive. Generally platinum can be used as jewelry or an industrial metal whereas palladium is normally used as an industrial metal.
The run up in palladium does not seem to make much sense. It would seem that now may be a good time to take profits in palladium which is selling at a historical high in relation to platinum and gold and reinvest in platinum which is selling at a historical low in relation to palladium and gold.
Just looking at the ratios now it would seem that swapping palladium for platinum is a smart move.
Swapping some of your gold for platinum also seems like a good trade here as well.
Everything moves in cycles. Selling at the top and buying at the bottom is the way to turn a profit. The biggest problem is they never ring a bell at the exact top or the exact bottom. Swapping, however, allows you to always hold a position without cashing out of the game entirely.
Look at the charts yourself. This one looks pretty easy to read. As always, do your due diligence before making any trade.
Larry lives in Shreveport, LA with his wife Puddy. Larry sells precious metals at the Silver Trading Company, LLC. Since 2001, Silver Trading Company has offered high volume sales of gold, silver, platinum and palladium to serious investors around the world. It also offers guidance about storage options for metals. Please visit Silver Trading Company’s website at www.silvertrading.net.
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