Palladium price forecasted to decline

June 27, 2016 11:47 AM


Palladium: Industrial uses as well as a precious metal

Today, understanding palladium is more important than ever because there are important correlations between the palladium/gold ratio and stock market prices. Currently, the ratio of palladium to gold is giving warning signals for both the economy and the stock markets.

Without any doubt, palladium is more an industrial metal than a precious metal. Here’s why per Wikpedia:

“The largest use of palladium today is in catalytic converters. Palladium is also used in jewelry, dentistry, watch making, blood sugar test strips, aircraft spark plugs and in the production of surgical instruments and electrical contacts. Palladium is also used to make professional transverse flutes. As a commodity, palladium bullion has ISO currency codes of XPD and 964. Palladium is one of only four metals to have such codes, the others being gold, silver and platinum. Because of its ability to absorb hydrogen, palladium is a key component of the controversial cold fusion experiments that began in 1989.”  

Only a small portion of total palladium demand is attributed to its precious metal characteristic.

Palladium versus gold as an economic indicator

“Though it is less popular and beloved by investors than gold is, palladium is actually a far better economic indicator. This is because palladium happens to be the most industrially used metal of the precious metals class. While the demand for palladium is overwhelmingly derived from industrial uses and sources at approximately 90% of its allocation, gold receives less than 10% of its demand from industrial applications. Palladium owes much of its popularity to emission controls. Though platinum is perhaps better known for its uses in catalytic converters, palladium has become the main emission control catalyst in vehicles using gasoline. This has a lot to do with the fact that palladium is less expensive than is platinum. Palladium is also widely used in electronics of all kinds because of its excellent conductivity and durability.

The importance of palladium became more obvious after the end of the Great Recession. In a significant amount of the time following the after 2008 crisis years, palladium outperformed its cousins the other precious metals, all of which had strong performances. Strong and gradually increasing demand from China and other emerging markets drove palladium prices. Emissions controls became more common in gasoline vehicles and palladium continued to grow its market share of these controls and other electronics. The icing on the palladium cake turned out to be threatened and tight supplies from main palladium mining and producing countries Russia and South Africa.”

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About the Author

I.M. Vronsky, Gold-Eagle & Silver-Phoenix500,