In recent weeks, gold has been forced to compete for the top spot in the precious metal market with palladium. YTD, palladium has gained by almost 20% while gold has fallen by more than 2.5%. As of this writing, an ounce of gold is trading at $1260 while palladium is trading at $1240. Two weeks ago, for the first time in more than a decade, palladium became the most valuable precious metal in the world. In this article, I will look at all the major details you need to know about palladium.
What is Palladium?
Palladium is a precious metal found deep inside the earth’s crust. It is white in color and is found mostly in South Africa, Zimbabwe, and Russia. It belongs to a group of metals known as Platinum Group Metals (PGMs). Other metals in this category include rhodium, platinum, ruthenium, osmium, and iridium. In its mining, palladium is mostly a byproduct of other metals such as platinum and nickel.
What is it used for?
Palladium is mostly used as a catalytic converter in the automobile industry. This is a similar use as that of platinum. The only difference is that palladium is used mostly in diesel-powered vehicles while platinum is used in petrol-powered vehicles. As a catalytic converter, platinum is placed in the exhaust pipes to help reduce the amount of carbon released in the atmosphere. It is also used in the jewelery and dentistry.
Why is the price rising?
The price of palladium has moved significantly higher, becoming the best-performing metal for two years in a row. The reason for this is that governments in Europe and China are starting to be very serious about compliance issues. They are doing this to reduce the amount of carbon emitted from the vehicles. This increase has led to an increase in demand for palladium. At the same time, supply is tightening as the cost of mining the core platinum and nickel increase. A recent report said that the amount of palladium produced is projected to fall against demand for the seventh straight year. Another reason for the current pricing is that speculators such as hedge funds are increasing their ownership as prices rise. This is based on the futures market data. Finally, there is some evidence that China is increasing its stockpiling for the metal. China is the biggest customer of the metal in the world.
How to trade palladium
Buying physical palladium is a difficult thing to do for ordinary traders like you. It is more difficult because it tends to be difficult to exit. Therefore, a good way to do it is to use the financial instruments such as those provided by Day Trade The World. The benefit of doing this is that there is a lot of liquidity in the market. This means that you will always have simple ways to exit once your target is reached. In addition, if the price reverses, you can easily exit and even short it to benefit. Another reason is that leverage can help you trade more. For example, if you have $1000 and you want to trade palladium, you can apply a leverage of 10X. This will allow you to open stakes worth up to $10,000.
External Useful Resources
- Learn more on Commodity