Ask most people on the street, "What is Palladium?" and a good portion won’t be able to answer you. The price of palladium is now higher than the price of gold, one of the most valuable and scarce metals on the planet. Currently, palladium’s price is $100 higher than the price of gold. This leaves us to wonder, what is driving this metal’s value higher than any of the other precious metals at the moment.
Demand For Palladium
The combination of palladium and platinum are used in the automotive industry in catalytic converters. Catalytic converters are used as a means to give off cleaner emissions from vehicles to help lower environmental impact. Roughly 80% of all mined palladium ends up in a car’s exhaust system. A smaller percentage goes to electronics, jewelry and the dentistry industry. Considering the amount of vehicles on the road, the palladium supply is not meeting the demand causing an increase in value for the precious metal.
As China and other countries are trying their best to cut down on harmful emissions, this makes the precious metal even more sought after. Countries tightening regulations cause the automotive industry to use more and more of palladium to combat these issues. In Europe, the number of diesel engines is decreasing. Diesel engines exclusively use platinum instead of palladium. As more vehicles in Europe are using gasoline-powered engines, this also drives the demand for palladium.
The Future Of Palladium
At the moment, the supply is tight for palladium. Historically, precious metals used in the automotive industry have been known to spike in price when demand outweighs supply. This is nothing new to the precious metals industry. Back in 98’, platinum saw a 500% increase due to a shortage in supply. Rhodium, another precious metal, increased more than 4000% before car manufacturers discovered methods to use less of the metal.
As the automotive industry slowly shifts to electronic cars, the demand of palladium could see a slow decline in value. Although hybrid vehicles still use palladium, palladium will still see a drop in demand if the industry shifts solely to electronic cars. The future is uncertain for palladium at the moment, but the price continues to rise at this moment in time.
If you’re looking to invest in physical assets such as palladium, silver, platinum and gold look no further than Boston Bullion. We will make the process as easy as possible for you and give you all the information you need to successfully invest in precious metals. Give us a call at (781) 710-8419 to learn more!