Monday, 25 May 2015

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Palladium: The New Gold?

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Man has always been attracted to gold, and it has always overshadowed other precious metals such as silver, platinum and, especially, palladium, a metal that has proven its relevance and usefulness to industry and the global economy. Palladium has been known to have far-reaching commercial applications that are predicted to expand and grow in the coming years. This could result to higher demand for this precious metal.

Investing in palladium and in other precious metals such as gold, silver and platinum has appealed to a lot of investors as a hedge against inflation because investors are slowly losing confidence on paper currencies. The increasing demand for palladium by the auto and electronic industry is seen as a good reason to invest on this metal. 
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Rarity of the metal

Palladium is a very rare metal with annual production all over the world a mere 200,000 ounces. Although deposits of palladium can be found all over the globe, there are only very few known deposits that are considered of significant size. These include reserves in Russia, Canada, the United States and South Africa.

Russia and South Africa have been known to have the largest reserves and to be the major producers of palladium. Although the metal is also mined in the US, 80% of the country’s palladium consumption in 2008 has been imported, but in recent years this has dropped to 60%. With deposits and production concentrated only in two countries known to have natural disasters and mine strikes as regular occurrences, there is growing apprehension of disruption of supply that could impact on the price of this metal.

The rarity and scarcity of palladium gave rise to the development of a technology that recovers and recycles the metal from used catalytic converters. The recycling technology resulted in an increase in palladium supply from just 195,000 ounces to over 1.1 million from 1999 to 2008.

Uses of palladium

Palladium is a soft, highly ductile metal that has a strong resistance to rust. These properties of palladium plus the fact that it is cheaper than platinum makes it a highly desirable element for the manufacture of catalytic converters. This is an automobile device that diminishes unsafe outflows by changing over carbon monoxide and hydrocarbons into water vapor, carbon dioxide and other safe gases. It is also a very desirable metal for dental crowns because of its soft property, and could be a potential cancer treatment option when made radioactive.

This rare metal is also used in several electronic products that include LCD televisions, cell phones, and computers. Aside from medicine and dentistry, it also has uses in ground water treatment and photography. In jewelry making, palladium is often used as a substitute to platinum, white gold or silver especially with the increase in prices in these precious metals. China is one country that has a very high demand for palladium jewelry.

What drives the price of palladium?

The price of palladium is very sensitive to the law of supply and demand. Because of palladium’s many industrial uses, its price is usually influenced by global economy rather than by the price of gold. It is expected to do better when the economy is strong. The the most significant factor that affects the price of palladium is the condition of the automotive industry.

Since the automotive industry has the highest demand for palladium, the price of the metal is affected by the changes in the condition of the industry. When auto production is high, demand is also high and so is its price. A slump in the auto industry also results in a drop in palladium prices.
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Rachel Timmins is a well-rounded Australian freelance writer and blogger. She writes about beauty and beauty treatments across the web that can be of value to people who visit any of her blogs. She is gentle, passionate, intelligent and an upcoming successful blogger and writer.


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