Silver and Palladium Shine


"PALL and SIVR are outperforming the SPDR Gold Trust ETF (GLD)."

While it's true that right now the price action in gold is acting very bullish, the price action in two other precious metals—palladium and silver—is on fire, as well.

Just take a look at the performance of the ETFS Physical Palladium Shares (PALL) and the ETFS Physical Silver Shares ETF (SIVR) over the last six months. The PALL has advanced more than 16% and the SIVR has traded up 17%. In fact, both of these ETFs are outperforming the SPDR Gold Trust ETF (GLD), which is up a little more than 10% in the last six months.

What is driving the moves in palladium and silver? It looks like Palladium is seeing strong demand due to a pickup in industrial production. Palladium is used heavily in the automotive industry along with platinum, which is represented by the ETFS Physical Platinum Shares (PPLT). Recently, Bloomberg reported that auto sales in Russia are set to advance by 13% in 2010 to 1.7 million vehicles. This is just one example that automobile demand is picking up in certain parts of the emerging world.

Strong demand for platinum and palladium can also be seen in the jewelry market and just simply as an investment allocation choice among retail trades and institutional trend traders.

Silver is also in heavy demand from the industrial sector, especially from the solar-panel makers. Plus, silver is following gold higher in the fear trade. Some market players think that silver and gold have in a way become the new reserve currencies around the globe. Both metals have very liquid markets that central banks around the world can move in and out of rapidly.

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