Palladium is often overshadowed by gold and silver and has been lagging these other precious metals in 2011. Still, a palladium exchange traded fund holds about $440 million in assets.
“Among commodities, precious metals such as gold have been widely adopted as inflationary hedges and ’safe-haven’ assets because of their traditional store of value. Investors should be aware, however, that despite its ‘precious-metals’ designation, palladium is primarily used in industrial applications and is likely to fluctuate with economic ups and downs,” says Morningstar analyst Abraham Bailin in a profile of ETFS Physical Palladium Shares (NYSEARCA:PALL).
The ETF is down about 18% year to date to lag gold and silver.
Palladium is never going to be a currency alternative like gold; however, the metal does have value as a commodity-like investment. With the advent of the physically backed ETF, the supply side can get stretched as demand increases, explains eBullion Guide.
The element will remain in demand as it is used in computers, smartphones and televisions. When electronics sales trend higher, the metal could find a low-supply, high-demand environment.
ETFS Physical Palladium Shares
Tisha Guerrero contributed to this article.