Palladium ETF

In recent years ETF’s have been growing by leaps and bounds and most especially precious metals within that industry. Part of the reason is that many investors are trying to protect their portfolios against the negative effects of inflation. Many commodities have grown to being worth literally billions of dollars and among those commodities precious metals are among the largest ETF’s traded today. Many people are unaware of this precious metal in the platinum family because it is very rare. The palladium ETF market was first introduced by a London based organization, ETF Securities just a few short years ago. It is believed that this particular ETF will become increasingly popular in the United States even though it is a highly speculative market.

First Traded in Europe
Although the palladium ETF is still in its infancy in the United States, investors were investing in palladium for years in Europe. One of the reasons it took so long to ‘take off’ in the States is because there are extremely limited supplies of it around the globe. As a matter of fact, there are only about 8 million ounces being produced each year which is small indeed as compared to other precious metals. Also, it wasn’t until quite recently that the industrial applications of palladium became as prominent as they are today.

Brief History of Palladium
Perhaps one of the reasons why palladium ETF’s are so speculative is because palladium is really a very new discovery. It wasn’t really discovered until the 1800’s by an English chemist who named it after one of the Greek goddesses. As discussed earlier, palladium is a member of the platinum family of metals each of which is unique in characteristics. Not only is palladium used in jewelry but it is also used in a great number of industrial processes as well. Furthermore, palladium is crucial to the automotive industry as it is used in the manufacturing of catalytic converters. (Anyone living in an area where emissions tests are mandatory can appreciate the importance of this precious metal and the rarity of it.) Nonetheless, even though palladium is used primarily in the automotive industry it is becoming increasingly popular as an investment commodity.

Factors That Drive the Price of Palladium
Of course as more and more emphasis is being placed on reducing our carbon footprint, palladium is in ever greater demand. While it peaked at over $1k per ounce in the year 2001, it is now roughly being traded for less than $500 an ounce. This is due to the fact that production levels have stepped up in the three main suppliers, Russia, South Africa and the United States. Another factor that influences price is hedging activity while inflation also impacts the price by inciting expectations among investors. Needless to say geopolitical unrest drives the price because of concerns that sufficient quantities won’t be mined.

It is always quiet amazing to see a virtual newcomer enter the market with such fervor. Investing in palladium ETF products, though highly speculative, is seen as a sound investment by many because it is in ever increasing demand. It can be traded on any of the commodities exchanges that trade in precious metals and although a bit riskier than silver or gold, should have the greatest potential for growth. It is possible to get real-time quotes online and any broker-dealer would be able to assist those new in ETF’s to begin trading in palladium. If your portfolio contains one or more precious metal ETF’s then adding palladium to the mix is a logical choice.

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