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Is Palladium the New Gold?
When the current outbreak of angst biting at the heels of the markets runs its course, and traders morph back into risk accumulation mode, you can count on palladium outperforming the other precious metals. During 2009, gold rose 27%, silver 49%, platinum 56%, and palladium a whopping 117%, and I expect this outperformance to continue.
Palladium, named after Pallas, the Greek goddess of wisdom, has been mined in South America for over 1,000 years, was discovered as an element in 1804, and saw jewelry use start in 1939. But it really came into its own when a nascent environmental movement got legislation passed requiring catalytic converters on all new American cars.
Toyota’s USA’s president, Jim Lentz, told me over a couple of beers that the US car market will recover from the present 11 million annual units to 15 million by 2015. (You can forget the drug induced haze of 20 million annual units free money brought us, returning in our lifetime). Fewer than one million of these will be hybrids or electrics. That means industry demand for catalytic converters is ramping up by 3 million units a year.
Which catalyst will the auto makers choose? Palladium at $440 an ounce or platinum at $1,550 an ounce? Hmmmm, let me think. They do have new management now, so maybe they’ll figure it out. Some 80% of the world’s palladium production comes from Russia and South Africa, dubious sources on the best of days. That means that a long position in this white metal gives you a free call on political instability in these two less than perfectly run countries. Also known as the “poor man’s platinum,” demand for palladium for jewelry in China has been soaring with the growth of the middle class. On top of this, you can add demand from the new platinum ETF (PALL), which with a launch of $250 million, will soak up a hefty 8% of the world’s palladium production.
Those set up to trade the futures can play the June contract, where a margin of $3,713 gets you a 100 ounce exposure worth $43,300. If you are looking for something to stash in your gun safe, bury in the backyard, or give to the grandkids on their college graduation, get physical. You can buy 100 ounce bars at $50 over spot, or Royal Canadian Mint one ounce .9995% fine palladium Maple Leaf coins at $50 over spot. And yes, you can even buy them on Ebay.
For more iconoclastic and out of consensus analysis, you can always visit me at www.madhedgefundtrader.com , where the conventional wisdom is mercilessly flailed and tortured daily, or listen to me on Hedge Fund Radio at http://www.madhedgefundtrader.biz/ .
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Remember cold fusion? The DIA does, and they like it for future Pentagon uses:
http://www.lenr-canr.org/acrobat/BarnhartBtechnology.pdf
P.S. - It would make demand for palladium incalculably large.
pall is already massively used in 'white' gold jewellery...and will replace it...
however still not all brokers offering you ETF's or futures... harder to buy than gold... this is the point...if i could i would buy immediately...
PD is so cheap bcs 1,000,000 troy oz per year get supplied from Russian stockpile. As soon as this stockpile get depleted price of PD will rise. As some not too distant past PD use to trade in par with PT... Its most undervalue metal among them all... And it will trade above AU.. Total supply of AU 2,500 mt, total supply of PD 210 mt...
Not sure about palladium being the new gold but Zero Hedge is definitely the new Bloomberg.
I believe platinum is a far more efficent catalyist than palladium justifying its higher cost, platinum costs more but you use less than it costs in palladium to achieve the same effect.
belly button fuzz replaces gold in backing currency? ...
palladium is palladium ,, gold is gold..
why the B.S. headline ...
are tacos the new burger..
+1 Buy paper Pd for all the stated reasons, but hold Pd? Meh. It will be the "new gold" (ahem) when CBs carry it on their books.
Can wait to buy the $42,000 Volt.
Now Tesla may be out of biz with the
PAO Cessna down.
And VW can't make TDI or TSI Jetta
Sportwagens fast enough.
Check out SWC for Montana Pa production.
Hint: it's in a LT downtrend like most
inflation hedges.. (May bounce up to $17.5)
http://www.jubileeprosperity.com/
Yes; we're ALL impatiently waiting in line to buy new cars that we don't need with money we don't have. And boy-howdy, things are getting better everyday! How much longer is ZH going to waste precious space with this nonsense?
Are palladium and platinum equally efficacious as catalysts in catalytic converters?
No, typically platinum has the edge in current cat convertors. But the two metals diverge in other areas, such as chemistry - particularly palladium's extreme affinity for hydrogen (absorbing 900 times its own volume) - its greater ability to take part in chemical reaction and lower melting point. In time I suspect Pd will become less of a simple cost-based alternative to Pt and will find its own applications.
h4rdware, do you have a link for the large hydrogen absorbtion (paper or study would be awesome)? You have made me curious.
There is some basic information here:
http://en.wikipedia.org/wiki/Palladium_hydride
And some slightly more controversial investigations here:
http://www.springerlink.com/content/x1l5755402651113/
There are quite a number of other papers, particularly more recent ones relating to developments in fuelcell membranes so the investigation is spread out over a few areas. I don't think the uses will be limited to this stuff though, there's an awful lot going on material science and I'm still expecting new surprises here and elsewhere.
Another slightly overlooked element is Gallium, which has really interesting effects on nearly all other metals, and can significantly impact their behaviour and performance, producing room temperature liquid metals (cold solder), liquid magnetic materials and so on. It will continue get more and more interesting.
It's used to mix w/Gold to make White Gold......although that's a SLIM Mkt right now.The main use is it's a close sub for Plat, and in several areas it is subbed.
The PGMs and other rare metal elements are still finding new technological uses, where base metals are becoming increasingly mapped-out in terms of new uses (only funky alloys and nano-engineered materials really expose new surprises here).
The new found technological properties of the PGMs is making them ever more valuable. Same applies to the Lanthanides (Nd, Ho etc.) and Metalloids (Bi, Te, Ga etc.). You are basically investing in future unknown capabilities, versus future mining/discovery capabilities.
My bet is that future uses accelerate and outstrip future discoveries. The fact they are rare and localised is the clincher.
Long everything thats difficult to locate & prize out of the ground, especially the oddities.
+1000... I am holding on to my astatine... all 75mg of it...
So what did they do with it?
Remember Ford believed that the price of palladium was going to skyrocket and bought a significant amount at a fixed price. They ended up losing 1 billion dollars because of a palladium surplus .
where do 'you' come up with this crap and does anyone ever pay attention to actual returns / accuracy, cause friggin wow already.
You won't make money in Palladium buying at these levels. It's the perennial pipe dream commodity, and it is in over supply. Yeah, yeah, yeah, I know, the secret Russian stockpile is running out...sure it is.
4 million increase in car production is only an extra million ounces of palladium use a year.
Disclosure: been long Canadian Palladium Maple Leaf coins since Oct 2008. That said, I question this metal's value as a base for jewelry. It's primarily an industrial metal, used as a catalyst for all sorts of chemical reactions, not just for car exhaust converters. Palladium sponge can also be used to store hydrogen in a reversible metal hydride complex. Like everything else, the value of this metal is directly tied to the 'flation trade.
- Heretic
PS The Russians produce a large amount of palladium, and not only from mines. Isotopes of palladium (105-110) are also extractable byproducts of uranium fission.
A few points:
1) Hybrids actually use more precious metals than non-hybrids. I believe this is because hybrid engines generally run colder than non-hybrids, so the activity of the catalysts is reduced and more metal is required to achieve desired conversions. I can't remember for sure though.
2) The Pd/Pt substitution isn't a strict 1:1. Pd is more easily poisoned and doesn't have as high activity as Pt in all applications. Thus, you can't think of Pd as a 1:1 substitute for Pt in all applications.
3) Pd's properties are very similar to Pt's, so most of the techniques you might use to make sure that a sample of Pt is "real" could be similarly applied to Pd. It looks pretty much exactly like platinum (at least to my eye) and is similarly resistant to chemical attack, but it's about half as dense.
4) Spitzer is right. Virtually every metal out there, including Ag, is useful, and thus their prices are tied to the economy. Gold, on the other hand, is pretty much useless. Apparently that's a good thing though...
PGM (Pt, Pd, Rh, Ir, Ru, Os) coins would be somewhat less practical than Au and Ag, though, because they're far harder to work with. This is part of why platinum jewelry is expensive even when Pt is cheaper than Au.
operating temperature of all internal combustion engines, are regulated within a range, thermostatically. lower operating temperature, would impair catalytic function, thus produce more emissions. the additional PM's in hybrids, reside in their electrical components.
Since the paladium is used in the exhaust stream, its temp is determined by the exhaust temp (higher than engine temp) and the reaction rate. Generally speaking, the catalytic converter is more than 100 degrees above exhaust temp.
Yeah, I was in a hurry and said it wrong, sorry. I believe the issue is that the gas engine is running less frequently, so the catalyst generally runs colder, and thus more metal is required to achieve desired conversions.
"Those set up to trade the futures can play the June contract, where a margin of $3,713 gets you a 100 ounce exposure worth $43,300" - Do you mean June 2015, when the car market causes the demand to skyrocket?
How can you tell real palladium from fake? Gold and platinum are fairly easy to recognize as genuine or not, but palladium?
electric cars do not use this stuff
they use
http://en.wikipedia.org/wiki/Rare-earth_magnet
(mostly from China :)
All precious metals will be the Neo, the "King" of asset classes.
"US car market will recover from the present 11 million annual units to 15 million by 2015."
I don't know what to say about someone who doesn't understand peak oil at this point. That being said I would suspect palladium will have plenty of other industrial uses as we burn increasingly dirty fossil fuels in an increasingly dirty environment.
Palladium might really take off if they find a way to use it in DIESEL engines, in which (to my knowledge) only platinum can be used as the catalyst.
Palladium in Canadian 1 toz coins are hard to find though. A dealer I know has 100 toz Russian bars.
Disclosure: a little long in Pd, longer in Au, Pt and Ag.
Palladium can indeed be used in Diesels, and the RUMOR on the street is, if it hit's $400.00 USD, a run on it is coming.
Now I wish I had snagged it at $158.00...................LOL, or $256.00.
Is madhedgefundtrader the new Gartman ?
NO.
NO !
Its tied to the actual economy, gold is not. Gold is only tied to the macro monetary fuck show. People are even saying that silver might be tied to close to the actual economy.
"the macro monetary fuck show."
I like it. And I agree, I'd prefer a PM that's primarily a call on gumnut stupidity and insanity. Those are in the bull market of a lifetime. The real economy, not so much.
+1
+10
mad hedge how about more quality and less quantity?The Banksters and their FLUNKY FED loaded DEBT on US Citizens while also removing their Wealth by shipping Entire Industries overseas! They produced a massive consumption Economy to produce massive DEBT and USURY GREED to exploit and manipulate nearly ALL AMERICANS!
Agreed (on the more quality & less quantity part).
Can't escape from the recursive, ranting voice in your head?
this article is about palladium
Skyrocketing unemployment will definitely ensure that.
China is outselling USA in consumption of new cars. The world does not revolve only around the USA and in fact Buick's largest market is said to be China. Don't ask me why Buicks... but that is another topic.
Simply an FYI, it should be noted that during the downturn in PMs that Plat, Pal and Rho were hit harder than gold (especially Rho, see the UGLY chart at www.kitco.com/LFgif/rh1825lnb.gif). Part of the jump in Pal and Plat pricing was due to electrical power problems in Africa, where much of the world's Plat comes from and thus far lower production from the mining sector in that area of the world. Have a feeling that Pal pricing simply went along 'for the ride' so to speak (pun intended) as Russia is said to have large Pal reserves and places have 100 oz bars of Pal from Russia for sale.
and peak oil and dollar devaluation. Although, with government ownership who knows what could be forced on us.
gordon, i think the official expression is green shoots
I guess they sprouted from all those "mustard seeds" of Kudlow's, eh? Maybe in the same pot in which the "Subprime Crisis" was "contained"?