What Are The Benefits of Owning Physical Palladium?
Along with platinum, rhodium, ruthenium, iridium, and osmium, palladium is known as a platinum group metal (PGM). All of these metals share similar properties and are often found together in nature. However, there are critical differences that determine the relative industrial utility and market price of the different PGMs.
Because all the PGMs are very rare and difficult to mine, the markets for these metals are much thinner than for gold and silver. In fact, platinum and palladium are the only ones commonly bought and sold. They do not trade on futures markets and are mainly bought by industry and investors in physical bullion.
Like platinum, palladium is an integral part of catalytic converters, which clean toxic vehicle emissions. This use accounted for 71% of palladium’s global consumption demand in 2011, followed by the electronics industry with 16% of global consumption, the dental industry with 7%, and the remaining split between jewelry, investment, and chemical industries.
Because of strengthening automobile and electronics demand in emerging economies and labor unrest in South African mines, palladium hit a nine-month high at the end of December as some predict a shortfall in the new year. The mining supply is limited, with Russia and South Africa accounting for about 80% of annual global output. Though it has risen 300% since its recent low in 2009, palladium remains 46% below its record high.
For those willing to accept higher volatility in return for potentially outsized returns, palladium remains an attractive option that fits into Peter Schiff’s overall investment thesis.
SchiffGold offers 1-ounce palladium Maple Leaf coins issued by the Canadian government. The US Mint does not currently offer a palladium product, though it was authorized to do so by law in 2010. A study has been completed and may lead to the product being issued as early as this year, which is expected by some analysts to drive significant additional investment demand.