Why Is Palladium Considered More Precious Now?
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Palladium, one of the precious metals, is now all of a sudden more sought-after than gold. Within the past two months alone, its prices have soared up to 25 percent, and its value has doubled since 2019.
With over $2500 for an ounce, palladium is now priced at par gold and several other precious metals. The consistent increase in demand has continued to push its price higher, and it’s not easing down any time soon.
But the question remains: why is palladium getting pricier?
Before we get to answer your question, let’s have a closer look at what palladium is and what it is used for.
Palladium and Its Uses
It’s a glossy white metal that belongs to the platinum family. Over 85 percent of the extracted palladium is utilized in pollution-controlling devices in cars and other vehicles.
It helps turn the harmful carbon monoxide and other pollutants into more eco-friendly carbon dioxide and vapors. A significant portion of the world’s palladium is extracted in Russia and South Africa, while the remaining comes from the platinum and nickel mines as a byproduct.
What’s Behind the Never-Ceasing Price Surge?
It’s due to the imbalance in demand and supply for palladium. The demand has continued to increase over time as more automobile manufacturers and buyers are becoming environmentally conscious. The supply, on the other hand, has stayed stagnant.
Government regulations on the emission of toxic gases from the vehicle is another factor contributing to the increased demand and price. Even companies that didn’t pay much heed to environmental protection are now forced to use more palladium in their manufacturing to comply with the regulations.
Consumers are also becoming aware and preferring to purchase gasoline-based vehicles that use palladium over diesel-based vehicles that use platinum — particularly after the emission tests controversy in Europe.
Why Isn’t the Supply Coping?
Since most of the world’s palladium is extracted as a secondary product, the output is lower than the demand. In fact, in 2019, the palladium supply fell short for the eighth time in a row. The consistent shortage has contributed to the record-breaking high prices.
Is There an Alternative for Automobile Manufacturers?
Several other precious metals can be used as a substitute for palladium; however, there’s still a lot of room for technological advancement and research to achieve the same levels of efficiency and performance as palladium-based devices offer.
Now that we know that the future of palladium is brighter than other precious metals, it’s definitely worth the investment. If you’re planning to build a strong portfolio, investing in palladium is a viable option.
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