The Bullish Case For Palladium
Palladium, like platinum, is undervalued and is well-positioned to launch into a bull market of its own as it follows the powerful and still-developing precious metals bull market.
While gold and silver have rightfully been in the spotlight lately, I want to briefly shift gears and highlight the opportunity in another underappreciated precious metal: palladium. This report follows my recent analysis on the bullish case for platinum. Both platinum and palladium are part of a group known as the platinum group metals (PGMs), which share similar chemical properties, industrial applications, rarity, and historically high prices. Recently, both metals have seen sharp price increases as they join the broader bull market in precious metals that began in early 2024.
For some background, palladium is a lustrous silvery-white metal that was discovered in 1802 by English chemist William Hyde Wollaston. It closely resembles platinum but is the least dense and has the lowest melting point of all the platinum group metals. Palladium does not react with oxygen at standard temperatures, which means it does not tarnish in air.
Like platinum, palladium is extremely rare. In fact, it is about 15 times more rare. To put that into perspective, if all the gold ever mined could fit into 3¼ Olympic-sized swimming pools, all the platinum in the world would fit inside a typical house, and all the palladium ever mined would fit comfortably inside a single living room! Due to the rarity of palladium ore deposits worldwide, Russia and South Africa together account for 78% of the global palladium supply.
Like platinum, palladium is prized for its unique physical and chemical properties, making it essential in a wide range of automotive and industrial applications. It plays a critical role in catalytic converters, chemical manufacturing, electronics manufacturing, dental and biomedical technologies, and pollution control. Palladium is also used on a smaller scale for investment purposes and in jewelry.
Unlike gold and silver, which have long histories as monetary metals used in coinage, currency systems, and investment, palladium was only discovered in the 19th century and has seen virtually no use as money. Today, only about 2% of its demand comes from investment. The vast majority, approximately 82%, is driven by the automotive sector through its use in catalytic converters. Another 5% comes from chemical manufacturing, 5% from electronics, and just 1% from jewelry.
