Palladium Prices Hit Record $1,800 High

Palladium prices soared to record heights Wednesday morning when spot prices climbed 2.1% to bring them to $1,802.24 per ounce. This rise has since continued into the afternoon, with palladium now trading at $1,815. It is now up more than $33 so far today. This is the latest in a general boom for the metal, according to Bloomberg. The publication speculates that stricter air pollution regulations in regions like Europe and China are likely the chief cause. Though not the only source of demand, they could explain why palladium prices have risen over 40% this year.

"palladium’s price has risen more than 40%"

This is because palladium is a key component in catalytic converters for cars. These reduce pollutants in vehicle exhaust by converting up to 90% of harmful gases into less noxious substances like nitrogen and water vapor. Because Palladium is a noble metal, it has a natural resistance to corrosion and oxidation. This makes it perfect for the increasingly common green energy initiatives implemented by world governments. This, in turn, makes it attractive to precious metal investors. While some auto manufacturers have suggested using Palladium’s cheaper sister metal, platinum, as a replacement, catalytic converter producer Johnson Matthey reports that platinum is currently only suitable for diesel engines. This means palladium will command the catalytic converter market for the foreseeable future. Palladium's smaller supply, in turn, makes this a significant restriction. “That tightness in the palladium market continues to be the main driver,” TD Securities commodities strategist Ryan McKay told Bloomberg over the phone. 

"palladium will command the catalytic converter market for the foreseeable future"

The world’s largest palladium reserves are located in Russia and South Africa, which have both run into trouble meeting demand in 2019, according to Bloomberg. South Africa, for instance, had its palladium supply drop the most in 18 months starting in August. Further, repeated power outages have made the supply's future difficult to predict. Government data in Russia also shows a dip in supply, which is not aided by news of a potential US ban on some Russian exports. All of this comes together to make an already valuable metal even pricier. While most of the palladium’s current demand comes from the auto industry, it is also prevalent in the jewelry world. This is because of its ductile nature, which allows jewelers to shape it without losing its toughness. It is also resistant to rust, and its natural white color makes it useful for producing white gold. Jewelry thus consumes as much as 19% of the world’s palladium supply, often commanding prices well into the thousands. Bullion Exchanges carries palladium coins and bars from reputable mints like PAMP Suisse, the US Mint, and the Royal Canadian Mint. With air pollution on the rise and no suitable replacements available in the near future, its recent price boom is likely to continue. This, in turn, will ripple out to affect other major palladium industries, like jewelry. Stock up now to prepare for future price jumps.