Weekly Update: Weekly Update: Palladium – the “Sleeper” Metal
Good evening, and welcome to this week’s edition of Stealth Trades!
Gold is soaring. So is silver. Both just made new all-time highs.
But if history is any indication, palladium prices are setting up to do even better in the coming months.
Palladium often flies under the radar as a precious metal investment, but it is far rarer than gold or silver. Annual global production hovers at just 6-7 million ounces, compared to 120 million for gold and 800 for silver.
Adding to this shortage is the fact that most palladium production takes place in areas with geopolitical tensions. 80% of global supply comes from Russia and South Africa.
The largest producer is Norilsk Nickel – a state-owned Russian mining operation. The company has already slashed Russian exports by 30% thanks to Western sanctions following the post-2022 Ukraine invasion.
South African mines are facing labor unrest, power outages, and declining ore grades, further constraining and creating international bottlenecks.
The World Platinum Investment Council forecasts a palladium deficit of 500,000 ounces in 2025. Non-Russian supply growth is tepid, and I don’t see Putin going out of his way to ship more supply to the United States any time soon.
New projects in Canada and Australia might add 35,000 ounces by 2032, but that’s a drop in the bucket against rising needs. This structural tightness—exacerbated by concentrated production by US adversaries—creates a supply constraint that will lead to soaring prices.
Because demand for palladium is not going to decline. If anything, it is likely to increase.
Palladium has unparalleled utility across key industries – especially those driving the transition to cleaner technologies. Thanks to its efficiency under high temperatures, it is the key component in catalytic converters which reduce harmful exhaust emissions like carbon dioxide.
Palladium’s corrosion resistance and catalytic properties make it ideal for electronics, where it’s used for plating printed circuit boards, semiconductors, and connectors.
In dentistry, it forms durable alloys for crowns and bridges. Jewelers favor it as a hypoallergenic, platinum-like alternative for high-end white gold settings.
Palladium is now being used in emerging applications like fuel cells and hydrogen purification since palladium membranes can selectively filter hydrogen for fuel production.
Hydrogen powered technologies alone are projected to require 20% more palladium by 2030.
But for price projections, I prefer to let the charts do the talking. And, as you’re about to see, the picture it paints is one of higher prices.
Below is a daily chart of palladium futures:
After surging by 40% in June and July, the metal consolidated in a shallowing pattern before breaking through the $1,350 level last week.
But stepping back, we can see an even larger pattern…
In the weekly chart above, we see a textbook “rounded bottom” pattern that is 2.5 years in the making.
Palladium is a tricky metal to buy since production is so limited. Coins often sell for 15-20% above spot prices whereas gold and silver are typically much lower.
Futures trade in line with spot prices, but it is a big contract. Representing 100 ounces of palladium, one PA futures contract controls $150k of the metal.
Luckily, there is also an ETF. PALL is the ticker symbol for the abrdn Physical Palladium Shares ETF. And if there was any doubt that investors are piling into this sleeper metal, take a look at the chart of PALL below.
Weekly trading volume has tripled in just the last few months.
Gold and silver have made great runs, but each is getting a bit extended. I hold both and believe they will be higher in the future.
But palladium is in the early stages of a fresh breakout. And investors looking for metals exposure may consider adding palladium to their portfolio in one form or another.
Best wishes for your trading,
