Explaining Palladium’s Performance Post-Election
The US elections are known for wreaking havoc in markets not only in the US, but globally. Amidst the chaos, one commodity has been dubbed the precious metal of the year: palladium.
Here’s our take on palladium, and its incredible performance this year.
What Is Palladium?
Commonly known as a sister-metal of platinum, this shiny white metal is a rare subsidiary product of platinum or nickel extractions. It belongs to the platinum group metals in the periodic table.
More than 80% of palladium is used to breakdown toxic gases like carbon monoxide into safer gases such as water vapor and carbon dioxide.
Palladium is an essential component in electronics and is used in many modern technologies such as fuel cells as well.
As a commodity with no easy substitutes, it has drawn the attention of investors over the years.
It’s also an essential component of catalytic converters and a valued manufacturing component for many industrial products.
The automobile sector dominates the annual global demand for palladium.
The US Elections and The Palladium Market
On the global market for commodities, palladium has been on the rise since the beginning of last year;its value doubled during 2019. But at the beginning of this year, palladium took a giant leap and grew by 25% in just two weeks.
But despite remaining more expensive than gold, it did not rise significantly due to the pandemic, unlike other precious metals.
However, since the day of the election, there has been a significant rise in palladium prices.
This is interesting because, unlike gold and silver, palladium almost always decreases when the economy is unstable. It is now showing a steep upward rise that is set to accelerate, given that the global economy stabilizes.
The most obvious explanation for this rise, even putting the election aside, is that its demand outweighs its supply. But this still doesn’t explain the sharp increase in palladium prices after the election.
The answer perhaps lies in palladium and the dollar’s relationship, or the lack thereof.
It is one of the few commodities that is barely affected by market fluctuations in the dollar, which somewhat explains why it continued rising even as the dollar fell slightly following the elections.
Predictions For 2021
If there is one precious metal that is guaranteed to rise in the next year, it is palladium. It is all set to reach a new all-time high in the coming year.
This growing price is due to several reasons, but it can be attributed largely to shortages and the divide between the metal’s demand and supply.
And since the dollar is expected to depreciate given the US’s current account deficit, it will also contribute to arise in palladium prices in 2021.
So, if you’re planning to invest in any of the big fours, palladium is a smart choice; get in touch with us, at Orion Metal Exchange, for the most recent financial market updates, as well as information on precious metals IRA accounts.