Palladium is classified as one of the lustrous chemical elements known as Platinum Group Metals (PGM). Palladium is characteristically less dense with a corresponding lower melting point. Most of this metal is used in the development of catalytic converters which are used in the automobile exhaust systems to turn harmful gases into less hazardous substances. This precious metal is also incorporated into the development of electronics items, medicine and chemical application, hydrogen purification, and also in jewelry creation.
Reasons for investing part of your portfolio in the surging metal
a) Rise in vehicle demands
The unprecedented rise in the number of individuals with disposable incomes across the developing world has pushed the demand for cars a notch higher. This meteoric rise has further been fueled by the plummeting petroleum prices across the world markets. The prices are surging because this metal is extensively used as a component in the manufacture of vehicle’s catalytic converters which are used in cleaning exhaust fumes. The rise in use of PGM’s in automobile manufacturing is also pronounced through the passing of friendly legislation that support substantive use of the precious metal across the world.
b) Reduction in the Russian Shipments
Recent altercations between Russia and Ukraine have seen the price of Palladium ascent steadily. The fears have been worsened by the discussion of sanctions against Russia by US and the European Union. Market indicators show that the sanctions placed on Russia could turn catastrophic by impeding the metal supplies. The situation may get worse since a later projected ramp in production level may not be sufficient enough to keep up with the current and future market demands.
c) Growing unease in RSA production lines
The Republic of South Africa which is a leading global producer of PGM metals has witnessed dwindling production levels due to the crippling strikes by mine workers in the production areas. According Royston Wild of Forbes magazine, a recent report indicated that between 5,000 and 10,000 ounces of metal production is lost every day in South Africa due to ongoing industrial actions. The jitteriness in the PGM production pace is also as a result of culmination of factors such as rising fuel, construction and electricity cost which are all expected to push the usd Palladium prices to astronomical highs.
These market dynamics, mentioned above have contributed to a bullish outlook as pertains the price of the precious white metal. The robust escalations are further expected to drive prices well into the next year. The white metal prices peaked to a high of $1,340 per troy ounce in the year 2009. Spot Palladium is traded at the spot market using the code known as XPD. When Spot Palladium is settled in USD during trading, the code extends to XPDUSD.
Forbes reports that Merrill Lynch expects the price of the white metal to retail at an average $792 per ounce all through 2014; this price is 10% higher than the 2013 price. Merrill Lynch further expects the usd palladium prices to hit the $1,000 mark after 2016. Just as with the PGM’s; the reserved gold option as a durable metal is also critical in the metals and banking industry. Gold is usually alloy with other metals to produce a variety of gold-color variants and also to increase its strength.