The latest trends in trading and investing in precious metals are cheap palladium. It is a move away from stereotypical investment in other metals. This not only makes for an enticing trade, but also adds diversity to your portfolio. What makes one hesitant about investing in the white metal is a lack of understanding of its prices.
One look at the 12-month chart of the commodity and you will hear alarm bells ringing. The prices went from AUD 2195 to AUD 4262and back in time. It’s worrying, but we’re here to help you understand what causes these price fluctuations. If you know what factors are affecting the prices of this metal in Australia, it will be you confident with your investment in it.
On the demand side, the fluctuations are caused by various factors, ranging from industrial demand to interest rates. The white metal is mainly used in the auto industry. Some other uses include jewelry, dental crowns, hard drives, and fuel cells.
With interest rates at record lows in Australia and most western countries, demand for cars is increasing. This, in turn, will affect the demand for white metal.
Boost from environmental standards
With each passing day there is a strong push towards stricter environmental laws. This has led to a crackdown on emissions and increased demand for gasoline and hybrid vehicles. As the metal is used as a catalyst to reduce emissions, its demand will increase.
The metal prices follow the basic laws of the economy. So when demand is high and supply is limited, prices go up and vice versa. Around 85% of the world’s supply is controlled by South Africa, Russia and Zimbabwe. There are some resources in Western Australia and the Northern Territory, but they are still in the early stages.
Few local players
Until recently, there was no dominant player in white metal mining. Some companies such as Artemis Resources, Platina Resources, Panoramic Resources and Podium Minerals have ventured into the extraction and processing of palladium. Due to the lack of local supply, much of the industry is dependent on imports. Import prices are subject to volatility due to geopolitical factors.
The US is the largest importer of the metal and tensions with Russia can cause prices to rise. Likewise, geopolitical problems in South Africa and Zimbabwe will disrupt supply and price increases. These countries are known to have constant industrial disputes and frequent changes in mining regulations that can delay or interrupt supplies.
Finally, Trader speculation This affects the precious metal price on the spot and futures markets. The supply-based demand and supply of the metal may differ from the demand and supply in the derivatives segment, causing price fluctuations. If the global economic outlook is weak, the metal will sell off as traders foresee a decline in industrial demand.
Palladium is the newest metal on the block when it comes to trading and investing. The price of the metal, like other precious metals, is determined by many factors at the local and global level. Knowing how these factors affect price can help you formulate well-founded investment strategies.
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