Tags: Palladium | dollar | coin | bullion

How About Palladium?

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Friday, 22 Nov 2013 07:07 AM Current | Bio | Archive

When the U.S. dollar dropped due to Federal Reserve Chair nominee Janet Yellen saying that the economy needs to improve more before the tapering of quantitative easing can start, palladium had a mini-rally in both price and demand.

The least known of the precious metal bullion quartet that includes gold, silver and platinum, palladium's price around $700 is halfway between silver and gold. It might be more rare than gold, but it is twice as affordable. And one ounce of palladium is much more convenient to store than 35 ounces of silver is.

In addition, palladium, like gold, silver and platinum, is used for industrial purposes. For example, it is a key component for catalytic converters for cars. This industrial demand anchors the price so that palladium is not as dependent on financial market demand. That means palladium can be a good insurance policy that counteracts the impact of a drop in the value of the U.S. dollar.

But over half of the world's supply of palladium comes from Russia, which has sometimes used its control over palladium for political and economic advantages. Another third of the world's supply comes from South Africa, whose mining infrastructure can be unreliable. Together, these factors can cause large and unpredictable fluctuations in the price of palladium.

Further, there are only two countries whose governments produce palladium bullion coins. Russia makes the .999 pure Palladium Ballerina and Canada makes the Palladium Maple Leaf. With the small volume of palladium bullion coins traded worldwide, they are not easily recognizable by most financial investors, which limits their liquidity.

The U.S. Palladium Bullion Act of 2010 authorized the U.S. Mint to perform a feasibility study on whether there is an adequate palladium bullion market to support a U.S. bullion coin. The answer was not at this time.

So is there room for palladium bullion coins in your portfolio? Gold, silver and to a lesser extent platinum offer greater advantages to investors looking for precious metals. However, because of the low number of palladium bullion coins and the greater impact of volatility on its prices, palladium can be an opportunity for the astute speculator. That was evident this past week when trading tripled on palladium.

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When the U.S. dollar dropped due to Federal Reserve Chair nominee Janet Yellen saying that the economy needs to improve more before the tapering of quantitative easing can start, palladium had a mini-rally in both price and demand.
Palladium,dollar,coin,bullion
367
2013-07-22
Friday, 22 Nov 2013 07:07 AM
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