Palladium's Future Shines Even Brighter


". . .the only precious metal to put in a new 52-week high in the face of a stronger dollar."

Palladium was the underdog of the precious metals sector for a long time, because for the most part it hardly received any attention. In the last few months this all changed and with the introduction of the palladium ETF (PALL), palladium has finally emerged from the shadows to the spotlight. Now the average Joe has a way to jump in and out of palladium without having to actually purchase the metal.

In reality owning the physical metal is far better than buying the ETF, but that is a topic for another day. When the gold ETF was introduced it helped drive the price of gold bullion because it provided an easy means to jump in and out of gold and so investors piled into it; from nowhere in a few years GLD has grown into a juggernaut. GLD is now the 6th largest holder of gold bullion in the world.

In the same manner demand for palladium is going to rocket upwards with the introduction of the palladium ETF. PALL hit the markets on the 8th of January and it has already had an impact on palladium's price. Note that palladium is the only precious metal that has actually put in a new 52-week high in the face of a stronger dollar.

While demand dropped a bit in 2009 due to the economic crisis, this drop did not seem to prevent this metal from surging to a series of new 52-week highs. In fact, in the past 15 months, palladium is the best performing precious metal.

China's appetite for palladium is growing at a ferocious rate. A report by David Jollie published in May 2009 by Johnson Matthey states that demand in China surged from 500,000 oz to 650,000 ounces, in 2008. Demand from the jewelry sector was rather strong in the first three quarters of the year. In 2008 there was a surplus of 460,000 ounces but net demand still climbed by 15,000 oz, to 6.85 million oz.

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