An increase in climate change awareness, policies and regulations has driven the demand for Palladium, a platinum group metal (PGM), into a higher price per ounce than gold. Palladium has taken over as the most precious metal. Gold prices remain stable, increasing steadily, while Palladium's price is determined by supply and demand. The world has become in critical need of it, for a good cause. When we say it's the most precious, we refer to market demand and not the value.

Vehicle emission reduction

Palladium is used in catalytic converters of motor vehicles to neutralize toxic pollutants by turning them into water vapor and carbon dioxide. Manufacturers normally spread palladium over a large surface area of the converter and in areas of the exhaust system. 

It is described shortly in that it absorbs harmful gasses emitted from vehicles.

Demand

Essentially one would look at vehicle production rates, planned vehicle manufacturing dates and multiple other factors to determine what demand would be at a given time spread across different manufacturers. Let's look at annual vehicle production rates by region for passenger vehicles and commercial vehicles between 1999 and 2007:

Demand has increased. Let's look at the years 2000 until 2018: 

Once again, an increase in demand.

Supply

Most sources would say that South Africa and Russia are accounting for 40% each of the global production of Palladium. That might change in the next few years as a company named 21C Metals are prospecting multiple pieces of land across different countries to find Palladium. South Africa experienced some set-backs regarding power supply and labour protests at their mines, resulting in an increase in the mineral's price [Read More]. Buyers of the metal are thus considering other alternative avenues to obtain the metal. US Relations with Russia are somewhat hostile in relation to trade, but Russia will continue to export to Chinese and other other countries' vehicle manufacturers.

Price history

Some say that prices will remain high for the next five years, but I wouldn't rely on that. We will definitely see market resistance once alternatives are being implemented.

Way forward on investment

Before you do anything or spend your hard-earned cash, decide for yourself. This is just an opinion and not financial advice.

Palladium are currently being offered in the form of bullion bars, coins or in contaminated form. Please don't go and steal or remove exhaust systems or catalytic converters of vehicles you don't own. You might buy from the local scrap yard and make yourself a few bucks (if you can refine it...).

Coins: don't pay an extra premium because it has an insignia or nice symbol on it. The price is not going to be worth the rarity of the coin among avid collectors who might be a potential buyer (this kind of buyer is hard to find). In this regard, I would recommend buying the Canadian Maple Leaf coin. It has no premium and you pay for the weight of the coin in ounces or grams.

Bullion bars: A bullion bar is always supposed to be at least 0.995 in fineness. If not, don't buy it. Always pay for the weight value, don't pay an extraneous amount just because it went through a fancy process. A small mark-up is okay, but the mark-up should not exceed 10% of the value of the metal you are buying. If it does, look for another seller.

Contaminated form: this might be difficult to sell to anyone in the industry or any hallmarking merchant. If you could manage to purify it, you will have a better chance on selling the metal.

Stocks and Indexes: trade on the price of Palladium by buying the commodity at the following exchanges I am willing to recommend:

• ETFPLD:SJ - The AfricaPalladium ETF is an exchange traded fund incorporated in South Africa. The fund is structured as non-interest bearing debentures that tracks the performance of the ZAR spot price of palladium. Each debenture is 100% backed by Palladium and equates to 1/100 of an ounce on issue date. Trade it at Standard Bank
• Plus500 - Online Trading Platform listing Palladium under the commodity symbol "PA". This commodity comes out expensive and you would need a strong margin trading to hold your long or short position. Don't buy this if you don't have enough capital to handle the change %.

From this blog I cannot assess your financial position. This is not financial advice. Consult with a professional before making financial decisions.