If you’ve been watching the financial markets, one area that you hopefully haven’t been missing out on is the precious metals markets. The precious metals – gold, silver, platinum, palladium – have been through a run-up in recent months. The market has seen the quick gains, then the weakness, and then the reprisal of the price of gold, silver, and the other precious metals. It’s been an exciting ride.
Perhaps the most heart pumping ride in recent months has been the rise in the price of palladium. In particular, for the first time since 2002, palladium, the world’s “forgotten” previous metal, is now worth more per troy ounce than gold. On the day of writing, palladium was trading at about $1,390 per troy ounce. Gold, on the other hand, was only worth about $1,310 per troy ounce.
What a ride it’s been so far. Palladium’s price gains have been impressive, as shown by the circled area below.
The massive rise in the price of palladium deserve a more detailed look. The graph below is the rise in the price of palladium from fall 2018 to early 2019.
On August 15, 2018, palladium closed at $849 per troy ounce. Since then, the world has seen nothing short of a “palladium miracle”. Palladium has increased in value from $849 per troy ounce to $1,392.
Why such an incredible increase for palladium? One of the major reasons has to stem from environmental concerns. With the shift in fuel from diesel to gasoline and to hybrid vehicles, there’s an inherent increase in demand for palladium because palladium is used more frequently in catalytic converters.
Coinciding with the rising demand for palladium is a more stable supply. What do you get with rising demand and non-rising supply? At least in the short-run, we get a rise in price.
With this background, let’s compare how palladium has performed in 2019 compared to 2018. The following is such a comparison through the first 40 days of 2018 and 2019.
What a difference a year makes! For the first 40 days of 2019, palladium’s price is up about 8%, a very decent return.
The 2018 picture is completely different. Through the first 40 days of 2018, palladium dropped 4% in value before picking up strength in August 2018.
Lastly, let’s look at 2019 in perspective.
How would you guess palladium’s performance so far in 2019 compares to how it performed through the first 40 days in prior years?
Here’s the answer.
The top year for performance this decade has been 2012. Through the first 40 days, palladium gained about 13% in 2012.
In second place is not 2019, it’s 2017. During the first 40 days of 2017, palladium gained about 12% in value.
In third place is 2019, up about 8% for the year so far.
Summing up, the year has been good to palladium holders to date. If the price continues to gain further strength, analysts may end up calling 2019 the year of the palladium boom. Of course, such a prediction is purely speculation at this point.