Gold is one of the big winners so far in 2020. From its low in March, gold has gained 37%, and it’s exceeded its previous, all-time highs set in 2011…
The combination of a weakening US dollar and a massive dose of stimulus from fiscal and monetary authorities all over the world, has resulted in investors seeking refuge in the shiny metal.
So far, platinum and palladium have had nice rallies off the lows, but they remain below their all-time highs.
Palladium is 24% off its all-time high set in January of this year.
In contrast, platinum is 57% off its 2008 high of $2,300.
Precious Metals Bull Market
If there were any doubts about gold being in a bull market, they were removed when it hit a new, all-time high last week. When gold makes new highs, it tends to drive interest and inflows into all the other precious metals, as well.
This is evident from the last, major gold bull market from October 2008 to May 2011. During this period, gold went from $700 to $1,900 for a 170% gain. During that time frame, palladium had a 435% gain, while platinum was up 165%. If the gold bull market continues to gain steam, investors will find opportunities in platinum and palladium as well.
Platinum and Palladium Fundamentals
Platinum is a rare metal that has historically been used as a store of value or jewelry, but it has plenty of industrial applications as well. Its major source of demand is for diesel engines and catalytic converters. Thus, it’s well-positioned for this current moment when industrial metals like copper and iron ore are rising in addition to “store of value” assets like gold.
Over the last decade, it’s been the weakest metal within the precious metals sector, as it failed to exceed its 2008 high in 2011, unlike the other precious metals. However, this underperformance has led to decreased production and disinterest among investors. But, these are the exact conditions that can lead to upside gains, when fundamentals do improve.
One looming catalyst is many car companies are increasing their use of platinum in engines due to its low price. Platinum is also a component of fuel cell vehicles that are being touted as an alternative to electric vehicles.
Historically, palladium was seen as an alternative to platinum, and their prices traded in tandem. However, over the last decade, palladium demand has exploded higher, as it became the preferred metal for catalytic converters for gasoline-powered cars. In 2010, automotive demand for palladium was 168 tons, and in 2019, it was 268 tons. Palladium is more prone to supply pressures, as it’s a byproduct of platinum and nickel mining.
Platinum and Palladium ETFs
Just like investors can buy gold through using ETFs, like the SPDR Gold Trust (GLD – Get Rating) ETF, they can buy platinum with the Aberdeen Standard Physical Platinum Shares ETF (PLPT) and palladium with the Aberdeen Standard Physical Palladium Shares ETF (PALL – Get Rating).
Platinum and Palladium Stocks
Here are three stocks that will give investors exposure to platinum and palladium…
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