Platinum and Palladium: Current Standing in the Market
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Rare and highly valued, palladium is one of the lesser-known members of the precious metals club. Even though the metal is currently priced at over $1700 per ounce—more than gold—a number of investors have failed to consider its worth, both as an investment and application on the industrial level.
Platinum has also been known to be priced higher than gold even though it’s currently available at an exceptionally low price per ounce—just near $900. Regardless of their characteristics and potential, the two metals have stayed undervalued for the longest time, but are we finally going to see a change? Let’s dive in!
Platinum and palladium in investment and application
Both platinum and palladium have been extensively used as catalytic converters in the automotive industry. Compared to platinum, palladium is harder in nature even though platinum offers more density and durability.
This has frustrated many investors and dealers in the platinum industry as it considerably falls behind palladium. Even with the low prices, the platinum demand has stayed low in industrial production but is likely to go up by 2020.
At the start of 2019, the market saw higher demand for platinum in Exchange Trade Funds (ETFs); however, the industrial demand stayed sluggish. Palladium, on the other hand, is still enjoying high demand and high price, in part, due to its rarity.
As for production, South Africa is responsible for more than 80 percent of platinum production, whereas palladium’s production plants are more diversified and located in multiple regions.
This has been one of the driving contributors behind the trust that investors have shown in palladium. Apart from the US, Canada also produces greater quantities of palladium than platinum.
In the auto industry, platinum saw a sharp fall after the Volkswagen emissions scandal that not only impacted the production and delivery of diesel cars but the price and demand of platinum as well. The scandal helped palladium rise new heights and it also became the key component of gasoline cars.
The revival of platinum in the automotive industry will depend highly on the revival of diesel cars. With electric cars and eco-friendly automotive solutions taking hold, there’s a possibility that dynamics for platinum remains the same or may improve mildly.