Palladium - Another Shiny Esoteric Metal?

There is always talk about gold and silver and platinum, but the least heralded of the ‘big four’ precious metals is palladium. Palladium, looks very similar to silver and platinum but is in its own right a very distinct metal. Although it is often looked strictly as a monetized (hoarded) asset, its actual applications vary.

 

Palladium is used primarily in catalytic converters, often mixed with platinum, but is a much cheaper substitute.As I had written before in the Potential of Platinum article, gasoline combustion engines do not need a pure platinum catalytic converter, only diesel engines. This proves a valuable alternative, as the standards for emissions, on an international level, are becoming more stringent and gasoline (of gasoline vs. diesel) is seen as the cleaner alternative. However in truth, diesel is environmentally cleaner, just sootier.

 

Moreover, palladium is used in cell phones, LCD monitors and ceramics. It is also used in medicine and dentistry, and in some fuel cells, aiding in the combination hydrogen and oxygen. Yet this article is not entirely an introduction to palladium, it is one to explain how one may get exposure to the metal.

 

In January of 2010, ETFS Physical Palladium Shares (NYSE ARCA:PALL) was launched, with a platinum counterpart (NYSE ARCA:PPLT). This followed the likes of the SPDR Gold Trust (NYSE ARCA:GLD) the iShares Silver Trust (NYSE ARCA:SLV). This allows an investor to have possession of the metal without the responsibility and risk of keeping the metal. It also factors storage fees and insurance, as it is priced at about 1/10th of an ounce.

 

One may also gain exposure by physically buying the metal. In recent years, countries like Canada have produced bullion coins, used less for coin collecting and more of a medium for bullion investing. One may also buy palladium ingots. These are most easily found on the internet. The Pamp Suisse mint offers ingots, but more often than not, if a coin dealer has palladium coins they may have palladium ingots.

 

The last way one may get exposure is by investing in a palladium mining company. There are very few pure palladium mines the most prolific in North America is Stillwater Mining (NYSE: SWC). They operate a large mine in Montana, which is one of a handful of mostly palladium mines in the world. Palladium is often found with platinum and the Bushveld complex in South Africa, Stillwater complex in Montana, Sudbury District in Ontario and the Norilsk complex in Russia are the most abundantly endowed regions known.

 

Norilsk may start to be known in popular culture because it is where the Russian billionaire (and Russia’s richest man) Mikhail Prokhorov, the new owner of the New Jersey Nets NBA team, made most of his money.