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
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20
Global "Debt Mountain": Beware of This "New Peak" - 13th Nov 20
Overclocking Zen 3 Ryzen 5600x, 5800x, 5900x and 5950x to 4.7ghz All Cores Cinebench R20 Scores - 13th Nov 20
Is Silver Leading Bitcoin or is Bitcoin Leading Silver? - 13th Nov 20
How Elliott Waves Simplify Your Technical Analysis - 13th Nov 20
How to buy Bitcoins using debit/credit card? - 13th Nov 20
Will COVID Vaccine Kill Gold and Silver? - 12th Nov 20
Access to Critical Market Reports - 12th Nov 20
Stock Market Dow Futures Reach 30,000 on News of COVID-19 Vaccine Trials Success - 12th Nov 20
8 Terms & Conditions You Must Know Before Asking For Life Insurance Policy Quotes - 12th Nov 20
Gold Stocks Post 2020 US Election Outlook - 11th Nov 20
Champions’ League Group Stage Draw: All You Need To Know - 11th Nov 20
Stock Market Secular Trend - 11th Nov 20
Stock Market Correction Curtailed by US Election - 11th Nov 20
What Causes a Financial Bubble? - 11th Nov 20
Ryzen 9 5900X RTX 3080 - Scan.co.uk vs Overclockers.co.uk UK Custom PC System Builder Review - 10th Nov 20
Killing Driveway Weeds FAST with a Pressure Washer - Saving Block Paving from LOTS of WEEDs - 10th Nov 20
Trump Fired, Biden Hired, What Next?  - 10th Nov 20
Looking for a Personal Loan? Here Is What You Have To Know  - 10th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Palladium Market Panic Buying - What Comes Next?

Commodities / Palladium Dec 06, 2018 - 03:33 PM GMT

By: MoneyMetals

Commodities

This week, a white metal reached a rare feat. Palladium has traded at a higher cost per ounce than gold.

Last month, the palladium market pushed through all remaining technical barriers by posting a new all-time high. A chronic supply deficit now threatens to launch palladium prices into a super spike.

A true shortage of physical metal may be at hand. The primary source of demand is automakers who require palladium for catalytic converters. Supply, meanwhile, comes primarily (more than 80%) from just two unreliable countries: Russia and South Africa.


On the London Bullion Market Association (LBMA) exchange, the palladium market is showing signs of extreme stress – even panic.

LBMA lease rates for palladium, which in recent years hovered barely above zero, have shot up to as high as 22%. That means palladium users are willing to pay loan shark rates just to be able to get their hands on this scarce commodity.

Could the palladium market be foreshadowing future developments in platinum, silver, and perhaps even gold? That question now figures prominently in the minds of metals investors.

Many silver bugs point to mining supply deficits as well as years of artificial price suppression as reasons to expect shortages and buying panics in silver. They may well be right.

However, the metal that tends to follow most closely in palladium’s footsteps is platinum. Both metals are used in catalytic converters. So when one gets substantially more expensive than the other, manufacturers have an incentive to switch.

Switching from palladium to platinum isn’t as simple as it sounds. With some modern high-performance catalytic converters, only palladium works. It can take up to 18 months for automakers to re-tool their production lines for a switch.

With platinum currently selling at a discount of more than $400/oz. to palladium, the economic incentives to substitute should start driving more demand to platinum. It will take place gradually – and the effect on price may be not be apparent for months.

Platinum May Be Poised to Follow Palladium

Patient platinum investors can look to history for some validation of the theory that platinum follows in palladium’s footsteps.

The last great shortage fear-induced panic buying spree in palladium occurred in 2000-2001. (It was only last month when palladium finally took out its 2001 high.) Palladium’s great bull market began quietly in 1997 at about $125/oz. Over the next four years, a cumulative 800% gain occurred.

By contrast, from 1997-2000, platinum went nowhere. It began trading at a discount to palladium in 2000.

By the time palladium prices peaked in 2001, platinum was sporting a $400 discount to its sister metal – the same as today.

What is next for platinum could be similar to what was next for it back then. By 2002, platinum prices caught up with palladium’s. Platinum proceeded to embark on an epic bull market – from under $500/oz to over $2,200 when prices peaked in 2008.

Of course, supply and demand fundamentals are different today. All the bullish news and momentum is in favor of palladium. It could, consequently, continue to outperform in the very near term.

There is, as yet, no supply deficit in platinum. But future platinum mining supply is very much in doubt. Market woes and rising political risk in socialist-controlled South Africa are forcing some of the world’s biggest platinum mines to scale back operations or shut down completely.

At some point, the price disparity between the two catalytic metals will simply become too great to be sustained. When the palladium:platinum price ratio finally reverses in favor of platinum, it will likely do so in a big way and trend in favor of platinum over a period of years.

The other white metal, silver, appears due to revert higher as well.

The silver:gold ratio recently dropped to a 25-year low. Like gold (and unlike the platinum group metals), silver has a long history of being used as money – making it especially desirable to have on hand in the event of a currency crisis.

Platinum is less commonly held by investors than is silver. Platinum bullion is available in the form of coins minted by a small number of government mints as well as privately minted bars.

The bottom line for investors is that a once in a generation opportunity now exists in the white metals. The same panic buying occurring in palladium today could be occurring in platinum and/or silver within the next few years.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2018 Stefan Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 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