Is Palladium A Good Investment? We Think So
Palladium is a precious metal that’s mined and produced worldwide and is highly sought after in many industries.
While palladium may not be the first thing that comes to mind when investing in precious metals, its price has been doing better than other metals in the last few years.
Why Should You Invest In Palladium?
While less popular than the other three most precious metals, it is now considered an essential store of wealth and an industrial asset. Investing in palladium may result in a lot of benefits in the near future.
Palladium has grown by more than 1,000% since 2008 and is predicted to continue growing.
Investors who are looking to have a more diverse portfolio or hedge against inflation would do well to invest in the metal.
What Affects Palladium Prices?
Palladium is currently trading for more than gold. The following factors have driven palladium prices to this record high:
The auto industry has the highest demand for palladium, making it the top influencer of palladium prices globally.
The auto industry is responsible for around 3/4th of global palladium demand because it is used in manufacturing catalytic converters.
The growing demand for vehicles has led to an increased demand for palladium as well.
South Africa and Russia supply 80% of the world’s palladium, so a halt in this supply due to sanctions or other reasons can result in a palladium price fluctuation.
Additionally, labor strikes in South Africa often result in lower palladium output. As with any other metal, this is something investors should look into before adding palladium to their portfolio.
The declining supply of palladium also signals that its price will rise shortly.
There is a lot of talk of substituting palladium in favor of other metals in the auto industry.
This is because of the rising prices of palladium and a number of highly available substitutes, such as platinum.
While European carmakers are switching to platinum, most automakers are still reluctant and are relying on palladium.
The US Dollar:
The value of the US Dollar on the foreign exchange market is currently weakening, and since palladium is priced in US Dollars, it will become an inflation hedge.
Every time the dollar weakens, consumers lose purchasing power and can buy less precious metals.
This scenario results in suppliers being reluctant to supply palladium, which causes the price to move upwards.
To find out more about investing in precious metals, get in touch with Orion Metal Exchange.