Saturday, September 7, 2019

"Investment Catalysts: Palladium’s Inexhaustible Price Swings"

Here's the monthly chart of the last couple decades of palladium prices, extending the series in the article below. Via FinViz:


From Winton's Longer View, June 20, 2017:
The emissions scandal has hit carmakers’ shares, but has also proved a fillip for another type of investment.
Palladium – used in the catalytic converters prevalent in gasoline vehicles - has been this year’s best performing commodity, rising 30%. One reason: speculators betting that car owners will shun high-polluting diesel automobiles, which use platinum catalysts, and prefer palladium-fitted gasoline vehicles. As a result, the palladium price is poised for the first time in 16 years to overtake that of its supposedly superior sibling, platinum.

The palladium market is both thinly traded and sports minimal stocks, leaving it prone to big price swings. Booms and busts are evident in the long-run chart of the palladium price below, some of which have persisted for years, as this analysis reveals.
Palladium and Platinum Prices (1970-2017) 
Platinum Palladium
Source: USGS; CRB; Winton
Indeed, the recent jump pales in comparison to the period from 1997 to 2001, when prices increased nine-fold, or during World War I, when they tripled. The historic volatility of the metal’s price has been compounded by the fact that production has been heavily concentrated in Siberia and thus linked closely to Russian political upheaval.

A steely-white metal, palladium was once exclusively used in industry, including in autocatalysis, jewellery, dentistry, electronics and the chemical industry. But in recent years it has become an investment vehicle. Similar dynamics affect platinum, which is sometimes assumed to be inherently more valuable than gold due to a range of cultural associations—from credit cards to anniversaries—quite apart from distinct fundamentals.
War Sparks Rise (1914-20)
During World War I, the need for explosives and engine spark plugs, which relied on palladium and platinum, caused the prices of both metals to surge. In 1914, Russia – responsible for 90% of the world’s platinum and palladium supply - banned the export of unrefined metal to encourage the development of domestic refineries. The Allies requisitioned their own stocks and prohibited exports to prevent reshipment to Germany.
Palladium and Platinum Prices (1910-1970) 
Ww1
Source: USGS; AMM; CRB; Winton
Twin Peaks (1972-80)....

....MUCH MORE