Skip to main content

Platinum and palladium revisited

Platinum and palladium have been on fire the past couple months, as you probably know.

We've recently highlighted platinum's surge here with some brief article mentions, but it's been a while since we covered the platinum group metals (PGMs) at length. And since platinum and palladium are probably both due for a nice short-to-medium-term pullback, you may take this post as an intermediate-term top signal!

Back in April and May of 2007, we highlighted the launch of the new platinum and palladium ETFs brought out by ETF Securities and Swiss bank ZKB. Demand for the new commodity ETFs was strong right out of the gate, and the recent upward move in the PGMs has generated more interest in these products.

Still, no platinum ETFs have been introduced in the US, a situation which is probably due to the metal's extremely tight supply and expected lobbying by industrial users against such a product.

And its not just the industrial users who would be upset by increased investment buying. It seems that platinum and palladium producers were also none too excited about the added buying and selling pressures that would result from new ETFs being launched.

With platinum currently trading at $2174 an ounce, and palladium trading at $514 an ounce, platinum commands a 4.2:1 premium over its complementary white metal. This premium for platinum over palladium has widened from a ratio of about 3:1 back in April of 2006, when we last covered the price action of the PGMs in some depth.

At that time, noting the possibilities for increased use of palladium as a substitute metal in industrial and jewelry applications, I wondered if the price disparity between the two metals might narrow in the not-too-distant future. So far, this has not been the case, as platinum still surpasses palladium in price terms, four-to-one.

However, palladium has enjoyed a remarkable run up in recent months, and its near-parabolic move towards $600 an ounce has been a boon to investors who bought in when the metal was trading between the range of $300 and $400 an ounce.

And since the price spread between the two metals persists, speculators and investors continue to focus on the future substitution value of palladium.

But speculators who bought in recent days had to be nimble or face quick losses, as palladium and platinum prices suffered sharp drops Thursday (March 6, 2008) on news that South African mines had regained power following recent power shortages. It seems that after such a sharp rise, the metals were due for a correction.

For more on the platinum group metals, and possible vehicles for speculation and investment in platinum and palladium, mining shares, and ETFs, please see the following articles. And remember the risks involved in speculating, and chasing any hot trend.

"Metals action and notes on palladium" - Finance Trends Matter.

"Got platinum/palladium?" - Finance Trends Matter.

"Platinum, Palladium are hot" - Financial Post.

"Palladium stars as investors focus on future substitution" - Mineweb.

"ZKB palladium ETF beats target, platinum lags" - Reuters.

"Palladium: the other white metal" - Seeking Alpha.

"Palladium, Platinum, Gold, and Electricity" - Financial Sense Online.

"Platinum bull run to continue for many years" - 2007 Reuters article.

Popular posts from this blog

The Dot-Com Bubble in 1 Chart: InfoSpace

With all the recent talk of a new bubble in the making, thanks in part to the Yellen Fed's continued easy money stance, I thought it'd be instructive to revisit our previous stock market bubble - in one quick chart.

So here's what a real stock market bubble looks like. 

Here's what a bubble *really* looks like. InfoSpace in 1999-2001. $QQQ$BCORpic.twitter.com/xjsMk433H7
— David Shvartsman (@FinanceTrends) February 24, 2015
For those of you who are a little too young to recall it, this is a chart of InfoSpace at the height of the Nasdaq dot-com bubble in 1999-2001. This fallen angel soared to fantastic heights only to plummet back down to earth as the bubble, and InfoSpace's shady business plan, turned to rubble.

As detailed in our post, "Round trip stocks: Momentum booms and busts", InfoSpace rocketed from under $100 a share to over $1,300 a share in less than six months. 

In a pattern common to many parabolic shooting stars, the stock soon peaked and began a…

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL! 

Please bookmark our new web address at Financetrendsletter.com

Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner.  



Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead!

As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter. You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter). 

Stay up to date with our real-time insights and updates on Twitter.

Moneyball: How the Red Sox Win Championships

Welcome, readers. To get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter.

The Boston Red Sox won their fourth World Series titleof the 21st century this week.

Having won their first Series in 86 years back in 2004, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it?

Quick background: in late 2002, team owner and hedge fund manager,John W. Henry(with his partners)bought the Boston Red Sox and its historic Fenway Park for a reported sum of $695 million.

Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship.

This brings us to one of my favorite scenes from the 2011 film, Moneyball, in which John W. Henry (played by Arliss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pitt) over to Boston with an excellent job off…