Question 1

What is the Gold Palladium Ratio?

Accepted Answer

The gold to palladium ratio is a measure comparing the gold spot price to the palladium spot price at any given time the market is open. This indicator shows the value of palladium to gold and vice versa in simplest terms. Bullion Exchanges’ chart for the gold to palladium ratio is recorded and displayed in troy ounces, but the ratio may also be measured in grams, kilograms, tonnes, etc. elsewhere.

The ratio is the price of gold divided by the price of palladium to show how many troy ounces of palladium equals one troy ounce of gold. Extremes in this ratio span from anything above 4 to a dip below 1.5. These extremes create trading opportunities for investors. If the ratio is high, palladium could be oversold and you might want to grab some before the price climbs back up. If the ratio is low, palladium could be overbought, and you might consider selling and buying gold instead.

Question 2

What Affects the Palladium Price vs Gold Price?

Accepted Answer

Gold a precious metal that has some industrial demand for jewelry, medical, and electronic applications, but it is primarily held as an inflation hedge. Palladium is much more impacted by industrial demand, especially in the automotive industry. This is because it is highly effective for catalytic converters to reduce harmful gas emissions.

The palladium market is much smaller than gold since it is so rare and often only mined as a byproduct of platinum or nickel mining. For example, about 210 metric tons of palladium was produced internationally in 2018, whereas about 3,300 metric tons of gold was produced that same year. From 1990-2017, only about 4,800 tonnes of palladium were mined but gold production was nearly 71,200 tonnes.

Overall fluctuations in the palladium vs gold price stem from multiple factors. The main factors include the health and growth in the world’s economy and demand for gasoline-powered engines. Uncertainty in the safety of the economy adds more demand for gold as a safe-haven asset. On the other hand, optimism in the world economy can positively impact the palladium price. Demand for gasoline-powered cars in the US and China influences the palladium price, with some additional support in Europe. If the automobile markets are doing well, it is possible that the palladium price can rise.

Question 3

Why Use the Gold to Palladium Ratio?

Accepted Answer

Using this ratio is a great method to time your purchases and understand when one metal is a bargain in comparison to the other. If the ratio is low, then the gold spot price is undervalued to the price of palladium. If it is high, then palladium is undervalued in comparison to gold bullion. Investors looking to get a better understanding of the gold spot price or the palladium spot price might want to use this tool to help them decide if it is time to rebalance their positions in either metal.

Question 4

Is the Gold to Palladium Ratio Similar to the Gold Platinum Ratio?

Accepted Answer

The short answer here is yes. Because palladium is a platinum group metal, the ratio can have similar movements to the gold-platinum ratio. Both platinum and palladium are incredibly subject to demand from the automotive industry.

Question 5

Where does Palladium Come From?

Accepted Answer

Palladium is a co- or by-product of platinum mining and a byproduct of nickel smelting. Most of the palladium supply in the world originates from Russia and South Africa, so the palladium price can further vary in times of geopolitical events in either country. Only approximately 10% of the palladium mined in the world comes from Canada, and the US manufactures another 5-6% each year. Russia and South Africa each manufacture about 40% of the palladium in the world.

Question 6

What can the History of the Gold to Palladium Ratio Tell us?

Accepted Answer

The palladium vs gold price chart dates back to the 1970s after the US got off the gold standard. The ratio rose during gold bull markets in the 70s and 2000s, which means that gold was overvalued in comparison to palladium. This ratio declined during gold bear markets in the 80s and 90s, reaching a bottom in 2001. This was about a 96.6% decline from its previous high at the end of the 20th century. The decline happened as a result of supply disruption and high-pressure demand in the automotive industry.

In December 2008, there was a massive spike in the gold to palladium ratio, which almost reached 4.9 after the start of the financial crisis. This demonstrated that gold is often a safe-haven asset, but palladium is mostly an industrial metal. Palladium is the most industrially significant precious metal among the main four metals (gold, silver, platinum, and palladium.) Industrial demand today accounts for more than 70% of global demand for palladium. Although its demand stems mostly from the industrial front, its status as a precious metal also offers the benefits of a safe haven hedge against inflation.

Question 7

How do I Buy Palladium?

Accepted Answer

If you decide that it is time to buy palladium bullion, you can grab it in the form of coins, rounds, and bars, just like you can with gold.

Although it is primarily an industrial metal, palladium offers strong diversification, a hedge against inflation, and it can certainly be the prized piece(s) in your collection. When you want to buy palladium, your options span from physical bullion and mining stocks to ETFs. However, if you want to own palladium bullion, only buying it in physical form will give you rightful ownership of physical palladium.

You might also consider buying palladium by trading in your gold bullion. Alternatively, you can also liquidate your palladium to buy gold when the price is right. Feel free to browse through our palladium and gold inventory but do not forget to check our deals page!

Question 8

Buy Gold or Buy Palladium?

Accepted Answer

Palladium is a much rarer metal than platinum, and it was actually only discovered in 1803 after dissolving platinum in acid. It is the least-dense of this entire platinum metals group, and it has the lowest melting point. Palladium is highly malleable and does not tarnish in the air, which is why it is so coveted for jewelry and industrial purposes. Since there is an increasing demand for both platinum and palladium, this makes any of the platinum group metals a very appealing choice for investors. Palladium is also usually used in making white gold, and the jewelry industry consumes as much as 19% of the world’s palladium production.

That said, gold is a worldwide recognized investment tool that has the respect and reputation as a monetary tool for thousands of years. Most demand for gold is driven by safe-haven interest, even though it also has numerous industrial applications.

So is gold a better buy than palladium? That is entirely up to your budget and your goals as a precious metals investor. Gold has a trusted history as a precious metal and was once used as money. But, owning only one precious metal might not offer you the benefits that a diversified safe haven hedge can.

Therefore, if you own little to no palladium bullion, you may wish to diversify into this rare metal instead of holding just one or two metals. Learn more about the fundamental factors for both gold and palladium for free in our Learning Center!

If you have any questions or concerns, please do not hesitate to contact us. Our customer service team is available Monday through Friday from 9 AM to 5 PM EST, excluding holidays.

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