3 Reasons Why The Palladium Market Will Get Stronger

Feb. 25, 2019 4:22 AM ETPPLT, PALL, PTM, PGM, PLTM15 Comments
Robert Kientz profile picture
Robert Kientz


  • Palladium is the most flexible PGM being used in catalytic converter technology.
  • Consumers demand more palladium in jewelry due to its weight-to-hardness benefits over other metals.
  • Researchers are finding more use for palladium in biomedical applications.

Why Palladium Prices Are Exploding

If you have been watching the palladium price recently, you may have noticed an interesting trend. The price of palladium has doubled since August 2018. Palladium is now $1493 at time of this writing. Here is a 3-month price chart in Palladium from Apmex.com.

Palladium Price Chart 2019

Image Source: Apmex

If you are one of my subscribers, you already know the reasons why palladium is in a bull market. Our December podcast described the reasons why the price was about to get much higher.

So, why is palladium price increasing? Here are the main reasons.

Palladium Demand is Strong

Palladium's largest single use is in automotive catalytic converters. The metal helps clean the air. More and more regulations are being made to reduce the emission of gases from automobiles as more of them are put on the road. This increases the demand from auto manufacturers for the metal.

Palladium Demand

Image Source: World Platinum Investment Council

Further, the tremendous growth in auto production in emerging economies like China has also caused increase demand for palladium in auto production. Chinese automobile demand has increased since the 1990s. It only recently fell off for the very first time in 2018. That led to a huge amount of pent-up demand for the metal around the world.

Image Source: Bloomberg

During the recent bull automotive bull market that was occurring, palladium demand kept increasing to the point that the market began experiencing supply deficits. The following chart shows that the palladium market has been in supply deficit for a number of years.

Palladium Supply Deficit

Image Source: Citigroup

Palladium Price Backwardation

The supply deficit is so strong that it had reached an inflection point. Lease rates for near-term palladium contracts had risen above the longer-term contracts. In commodities contracts, this is known as backwardation.

When a commodity

This article was written by

Robert Kientz profile picture
Author of DropShadow and founder of Gold Silver Pros @ goldsilverpros.com.I have been analyzing the precious metals markets for over 10 years, and have built relationships with many experts in the field which include miners, geologists, and analysts. My site is dedicated to providing you professional research on the precious metals market.I have spent over 20 years working in the technology sector as both an IT and information security professional. I have a Masters degree in Information Assurance & Security, a Bachelors in Business with an MIS concentration, and an Associates in Applied Sciences in Unix Administration and Cisco Networking. I began my investing career over 16 years ago while completing several investment advisory exams - Series 3, 6, 63, and 7 covering the commodities, insurance, and stock markets. After watching the 2008 recession calamity, I began deep research into the economy and markets where I found solace in the writings of Austrian economists whose theories accurately predict and analyze the issues surrounding currencies and financial crises. I then wrote a book, based upon my own extensive research, entitled Dropshadow: The Truth About the Economy, which is available on Amazon.Shortly after writing the book, I began writing for Seeking Alpha and other online outlets on economic and financial topics and issues. I have focused my market research writings on Seeking Alpha since 2018.In 2018, based upon my deep research into the precious metals, I launched my personal newsletter service for investors @ www.goldsilverpros.com where I provide precious metals investors with research updates and insider intelligence in order to help them better invest in those markets.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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