Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

How to Profit from Palladium Huge Price Surge…

Commodities / Palladium Mar 31, 2014 - 01:54 PM GMT

By: Money_Morning

Commodities

Peter Krauth writes: we last checked in on palladium, the precious metal so critical to the consumer electronics we use hundreds of times a day.

At the time I said I was bullish for a number of market reasons.

As it turns out, there were even more...


Now it's time for another close look, since the bullish forces are only picking up speed.

What's more, some new ones have materialized, pointing to a massively profitable palladium spike...

The Economic Factors Are Undeniable

When we talked about palladium back in October, I highlighted some of the underlying forces at play that were likely to support and push its price higher.

Those things - mainly sales of electronics and light vehicles - have powered ahead, helping to lift palladium prices as expected.

Palladium went from $710/oz. in October to $800/oz. on an intra-day basis just last week.

Expect the exclusive metal to head higher as recent developments are only adding to its bullish outlook.

You already know that South Africa and Russia are where nearly 80% of annual palladium supply is mined.

Since October, South Africa's problems with striking miners have only gotten worse. For three of the country's largest platinum producers (palladium is often a byproduct of platinum production), the recent nine-week strike has caused irreparable damage, costing the sector almost $1 billion in revenues.

Farther east, sales from Russian palladium stockpiles also appear to have reached their limits.

Traders closely track Russian shipments of palladium to Switzerland for clues on their supplies. That's because many believe Russia moves the bulk of its palladium through that country. February shipments were 6,500 ounces and have been trending lower since early 2011, according to Barclays, which expects a "sizable deficit" in 2014. And that's despite climbing prices.

Complicating matters are the developments in the Ukraine. The West is imposing sanctions on Russia, and that could limit their ability to export palladium, potentially badly denting supply... at exactly the wrong time.

Meanwhile, a perfect storm is building that could push palladium higher still...

Just when supply is being crunched, demand is popping.

Last Thursday, South Africa's Absa Bank Ltd. (JSE: ABSP) listed its NewPalladium ETF, allowing that country's investors an easy way to gain exposure to the physical palladium market.

In the weeks preceding its launch, Absa had accumulated 8,600 ounces of palladium, which according to the South African Reserve Bank, must be sourced in the country. Should the ETF prove popular, Absa will of course need to buy more palladium to satisfy demand.

Based on the company's experience with palladium's sister metal, demand could be very robust. Absa already runs the NewGold NewPlat ETF (JSE: NGPLT). Within just four months of its launch, NewPlat has become the world's largest ETF of its type. NewPlat ETF already holds 956,000 platinum ounces, and the company still expects significant growth.

Not to be outdone, Standard Bank has also just launched its own palladium ETF, introducing the second new palladium ETF in just the last week. Standard already offers a palladium-based ETN (exchange-traded note), but its newest addition is backed by physical metals held in London.

As these ETFs grow, its means more palladium will be removed from supply.

These Charts Plot the Way... to Your Profit

Platinum and palladium are sister metals. As part of the platinum group metals, they are often unearthed together.

These are metals that have similar applications, but are not necessarily interchangeable.

Most palladium is used for gasoline engine catalytic converters, whereas the largest single use for platinum is in diesel engine catalytic converters.

Technological applications for these metals are developed based on their specific properties. So it's nearly impossible in most cases to simply "swap" one for the other. That means palladium-based anti-pollution systems will keep using the metal even as its price rises.

Nonetheless, because these sister metals have similar properties and applications, their price relationship is something that's closely followed.

Right now, the spread between platinum and palladium prices has fallen to a 12-year low, as palladium prices have roared ahead to close the gap further.

The following chart shows that as palladium hit a 2 ½-year high last week, the platinum-to-palladium ratio has hit a marked low. While this may reverse in the short term, I expect these low levels to become a new norm.

And while we're palladium chart gazing, have a close look at this next one.

Back in October I included this chart when I discussed palladium. At the time I pointed out that the eight largest futures traders were short 127 days of world palladium production. At the time, it was at a 13-year high, and palladium was in first place ahead of all other major commodities.

Today, palladium's still short about 127 days of production by its eight largest futures traders. The only thing that's changed is that silver has taken over the first spot in the chart.

If palladium prices spike, these traders could be forced to cover their large short positions by buying offsetting long contracts, reinforcing and potentially pushing price gains higher still.

As the setup for palladium (and platinum) continues to offer a bullish fundamental outlook, Real Asset Returns readers have recently added exposure to these metals through a superior ETF-type investment vehicle backed by physical metals.

Investors looking for exposure strictly to palladium should consider the ETFS Physical Palladium Shares ETF (NYSE: PALL), which does a pretty good job of tracking palladium prices with an annual net expense ratio of 0.60%.

The takeaway: remember that demand fundamentals remain strong, while South African and Russian supply challenges could exacerbate supply issues in short order.

All of this points to a very bullish outlook for a rare but increasingly necessary metal...

Source : http://moneymorning.com/2014/03/31/profit-huge-price-surge-youve-created/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules