Palladium is a new kid on the block for metal investors. It’s a super rare metal and was only discovered in the 1800s. Similar to platinum, it looks silver in colour and wasn’t particularly popular until recently. However, that’s all changed and it is currently in high demand. It costs around 50% more than gold and is one of the most valuable metals in the world.
Around 90% of palladium is currently used in the manufacture of car exhausts. And demand is likely to remain high as trace amounts are also used in the manufacture of electronics, dentistry, medicine, hydrogen purification, chemical applications, groundwater treatment and jewellery.
If you want to take the plunge and invest in palladium you have several options. You can invest through a share dealing account, a stocks and shares ISA, or through your pension scheme.
Once you’ve chosen an investing platform you can start researching which fund, commodity or stock you want to purchase.
Here are the steps you need to take to set up a share dealing or trading account:
ETFs or exchange traded funds can be a great way to diversify your investment by spreading it between several assets. There are two types of palladium ETF: one tracks precious metal futures, and the other invests in metal mining stocks. Here are some of the main pros and cons of investing in palladium through an ETF:
Investing in palladium stocks means you’ll buy shares in companies that mine palladium.
Investing in palladium futures isn’t for the faint hearted. You’re agreeing to buy stocks in a commodity at a set price, which you will then receive some time in the future. You’re aiming to buy stocks at a lower price than they would otherwise be, but you might be caught out if the price moves in the opposite direction to your predictions.
Futures trading is very risky and you’ll need a strong constitution and good understanding of stock trading.
Rather than investing in palladium stocks, you may decide to invest in physical palladium bullion. You can buy bullion ranging from an ounce to 5 or more kilograms.
Owning physical palladium bullion is a longer-term investment and it may be harder to sell than other types of palladium investment. Like other investments, physical palladium prices are still influenced by the market.
Norilsk Nickel is a Russia-based mining company and is the top palladium producing company in the world. It currently mines around 40% of the world’s total production. It’s also one of the world’s top producers for platinum, nickel and copper.
Despite the huge spike in palladium prices, Norilsk Nickel’s share price is currently in the doldrums due to the ongoing conflict in Ukraine.
Its share price is down 89.9% in the past month and 90.9% in the past 6 months as investors have been piling out of Russian stocks.
The fall reflects turbulent market conditions for Russia’s commodity companies. At the time of writing, Moscow-listed stocks are currently suspended from trading on the London Stock Exchange as part of the sanctions against Russia, following the conflict in Ukraine. The Russian ruble has almost halved against the dollar in the last month.
With the situation in Ukraine and Russia so uncertain, this is an extremely risky stock to purchase and it’s possible that prices may fall further, depending on the outcome of the conflict.
Sibanye-Stillwater is one of South Africa’s biggest miners, as well as one of the largest platinum and palladium producers in the world. It has mining operations in South Africa and the Americas.
Its share price is up 32.1% in the last month and 34.6% in the past year.
With the future of Russian palladium production unclear, it’s likely that demand for South African palladium will remain strong. Several Western companies have indicated that they are looking to redirect supply away from Russia in the future. This could lead to increased future profits for other non-Russian palladium mining companies like Sibanye-Stillwater.
It’s possible that production will see significant disruption during 2022, as unions have recently announced strike action over a pay dispute.
Anglo American Platinum is best known for its platinum production, but it is also one of the world’s biggest palladium producers. The majority of its mining operations are based in South Africa.
Its share price is up 29.6% in the past month and 62.4% in the past 6 months. This price increase reflects a recent announcement that Anglo American Platinum expects to report a 166% increase in profits for 2021. The increase in profits is largely due to increased platinum production during the period.
Buy Anglo American Platinum shares
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Read the full methodologyNot long ago, palladium was less valuable than platinum. But recent manufacturing uses have stoked demand and prices are now sky high.
Palladium prices have risen due to a classic combination of high demand and low supply. The metal is very rare and is only mined in a few areas in South Africa, United States, Canada and Russia.
The recent conflict in Ukraine has added further to palladium prices as a large amount of palladium mining takes place in Russia.
Increased demand has been fuelled by tightening regulations on vehicle emissions and the reduced popularity of diesel vehicles. Petrol catalytic converters use palladium whereas diesel vehicles mainly use platinum.
Experts expect the price of palladium to continue increasing over the next couple of years before finally dropping off. It’s likely that new emerging technologies will use cheaper platinum in catalytic converters.
Palladium is in demand for many different uses including the following:
In times of stock market volatility, investors tend to see commodities, including palladium, as a safe investment. However, you still need to ensure that you diversify your portfolio as no investment is truly safe. Make sure you do your research and ensure you are aware of the risks involved before you take the plunge.
40% of people we surveyed said they already invest in palladium stocks or would consider investing in palladium stocks.
| Response | |
|---|---|
| Not sure | 40.96% |
| I would consider it | 35.61% |
| I wouldn't consider it | 19% |
| I already invest in this | 4.43% |
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
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