Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like…

Commodities / Palladium Feb 13, 2020 - 04:03 PM GMT

By: MoneyMetals

Commodities

The explosive price action seen in palladium recently is indicative of a physical shortage.

Put simply, available inventories are failing to keep up with demand (largely from the automotive industry).

According to Refnitiv GFMS, the palladium market will be under-supplied by 883,000 ounces this year.

Stresses on the physical market are showing up in spiking lease rates, illiquidity, widening bid/ask spreads, and disconnections between quoted spot prices and actual physical prices. Most importantly, the deficit in palladium supply is manifesting in the form of rising prices.



Palladium hit a record, briefly touching the $2,500 level last month. And despite selling off a little in recent days, Bank of America Securities analysts see the metal’s chronic supply deficit pushing prices up to $3,500 an ounce before the bull market ends.

The point of this article, however, isn’t to promote palladium as a great buy at these lofty levels. Chasing an uptrend this late into its potential blowoff phase is risky.

When metals markets top, they don’t merely level off. They tend to reverse violently.

That said, the opportunity palladium presents for metals investors is that it charts a similar path forward for platinum and silver (and to a lesser extent gold, which shouldn’t be expected to move as dramatically).

Since 2016, when palladium began the year trading around $500/oz, prices have quintupled.

Silver bottomed in 2016 just below $14/oz. Prices advanced strongly that year before falling back into a major trading range.

A quadrupling would take silver over $50 – and that would likely just be the warm-up phase that finally establishes new all-time highs. Then the explosive phase will begin that sees new high after new high, week after week – just like we’ve seen in palladium over the past year.

As yet, there isn’t much evidence that is happening. But the longer a price gap of more than $1,000 between the two catalytic metals persists, the more motivated automakers will be to embark on redesigns of existing equipment to accommodate much cheaper platinum.

Major automakers such as BMW are investing heavily in hydrogen-electric fuel cell technology as a way of meeting zero-emissions goals. Once too expensive to be practical, costs for fuel cell powertrains are expected to become competitive with conventional powertrains over the next few years.

The upshot for platinum is that it is used in the hundreds of small cells that make up a fuel cell stack. If fuel cell vehicles catch on, demand for platinum could go into overdrive.

In the meantime, the ongoing run on the physical palladium bank will be something to behold. It’s exactly what many gold and silver bugs who have been calling out paper manipulation and price suppression schemes have been predicting.

Although the markets for gold and silver remain relatively quiet now, they could soon become energized by palladium and the larger exposure of futures markets that produce multiples more contracts for physical metal than can ever be delivered.

Precious metals analyst Craig Hemke wrote recently, “Understand that palladium, just like gold and silver, is overseen by the bullion banks, which are responsible for physical delivery in London… The Banks manage a fractional reserve system of just in time physical delivery. As gold and silver investors, we await the day when a ‘run’ on these bullion banks exposes the lack of physical metal behind this system. The current price action in palladium suggests the possibility that this ‘run’ may have already begun.”

If you happen to own physical palladium, you’re in the driver’s seat. You can sell anytime to a dealer like Money Metals or hold out for a desperate buyer who may be willing to pay a sizeable premium over spot just to get his hands on some ounces of the scarce metal.

When there is a run on the bank for silver, we expect many types of coins and other bullion products to command unusually large premiums over spot.

The most susceptible to large premium spikes are no-longer minted historic coins such as pre-1965 90% silver dimes, quarters, and half-dollars.

The good news is that they and most other silver bullion products can currently be had at very low premiums over spot prices. You’d be wise to stock up while fantastic bargains can still be had…then hang on tight for the ride ahead.

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.

© 2020 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