Domestic Palladium Gets another Boost from General Motors

In 1998, the economy was good. Some say great. People were buying…stuff. The NASDAQ was gaining ground on the DOW and this crazy thing call the internet was taking off. I remember being charged by the minute and tying up the phone line at my home for hours. And General Motors (NYSE:GM) was doing very, very well. With that General Motors signed a contract to buy palladium from Stillwater Mining (NYSE:SWC), America’s only platinum and palladium producer.

Let’s jump ahead 10 years. We passed the dot com bubble burst. The US was in the middle of a few wars (aggregated as the War on Terrorism). And the whole world’s economy was moving to a steel drum beat limboing lower and lower wondering, both aloud and in silent prayer, “How low can we go!?!” And General Motors had to file bankruptcy. Good times all around. With that bankruptcy, General Motors had to sever contracts with some of its suppliers. One of which was Stillwater Mining. GM was going to buy palladium for catalytic converters from foreign companies.

Two years later, the economy is doing better and GM is not longer operating off of borrowed US taxpayers funds to survive. Two years later they have renewed their relationship with Stillwater after some negotiations. For the next three years (starting in January 2011) GM will buy Stillwater palladium, platinum and rhodium for end use in their vehicles.

This further emphasizes Stillwater’s position as palladium also has a new vehicle for demand - a US bullion coin. Palladium has gone from being an esoteric precious metal to necessary platinum alternative and investment medium. Stillwater holds the unique distinction of being the only palladium and platinum producing com[any in the US.