The palladium market has typically been a lesser-known option for precious metals investors compared to the gold and silver industries. Recently, however, growing demand and a supply deficit have led investors to seek out ways to invest in palladium.
While palladium is used in jewelry, most of the metal is consumed by industrial markets — catalytic converters, which help remove the pollution from combustion engines, use more than 70 percent of global palladium. Electronic and chemical applications are also key in the palladium industry.
On the supply side, the world’s largest palladium producer is Russia, followed by South Africa. South Africa has been the site of many mine disruptions in the last several years, largely due to strikes and a lack of long-term investment in production facilities. Despite the risk that may be associated with this particular emerging market, development in the palladium sector still exists within the region.
With that in mind, here’s an overview of different ways that market participants can invest in palladium.
1. Ways to invest in palladium: ETFs
Palladium-backed exchange-traded funds (ETFs) track the precious metal like an index fund, but trade like stocks on an exchange. Examples of palladium ETFs include the Sprott Physical Platinum and Palladium Trust (ARCA:SPPP) and the Aberdeen Standard Physical Palladium Shares (ARCA:PALL).
The Sprott Physical Platinum and Palladium Trust ETF was created to invest and hold substantially all of its assets in physical palladium and platinum bullion. The trust currently holds 39,065 ounces of palladium and 48,915 ounces of platinum. The portfolio is held in custody at a federal crown corporation of the Canadian government.
For its part, the Aberdeen Standard Physical Palladium Shares is designed to track the performance of the palladium price, less expenses. It holds over 156,000 ounces of palladium in London at a secured vault belonging to JPMorgan Chase & Co. (NYSE:JPM).
2. Ways to invest in palladium: Bullion
Another way of investing in palladium is by holding physical assets directly such as palladium bullion. In fact, financial investors may buy palladium bullion bars, palladium bullion coins or collectible palladium coins for portfolio growth. This approach may suit investors looking to invest both small amounts of money in the metal and larger quantities of cash.
Palladium bars and wafers are another option, but these are not as readily available.
3. Ways to invest in palladium: Stocks
Finally, investors may gain exposure to palladium by investing in a palladium-focused business. This method of palladium investing can be tricky — most of the world’s palladium is produced in countries with primary platinum mines. As a result, it’s difficult to gain exposure purely to palladium.
Still, there are at least two primary palladium miners in North America: Sibanye-Stillwater (NYSE:SBSW,JSE:SSW) and Impala Platinum Holdings (JSE:IMP).
The following TSXV- and TSX-listed companies are much smaller scale, but also offer investors exposure to palladium, in addition to platinum and other metals:
- Grid Metals (TSXV:GRDM,OTCQB:MSMGF), whose focus is the East Bull Lake palladium project in Ontario, Canada.
- Ivanhoe Mines (TSX:IVN,OTCQX:IVPAF), which is developing the Platreef project in South Africa.
- New Age Metals (TSXV:NAM,OTCQB:NMTLF), a green metals company developing its River Valley platinum-group metals property in Ontario.
- Nickel Creek Platinum (TSX:NCP,OTCQB:NCPCF), which holds the Nickel Shäw polymetallic project in Canada’s Yukon.
- Wallbridge Mining Company (TSX:WM), which is currently exploring for base and platinum-group metals at its Sudbury projects in Ontario.
This is an updated version of an article first published by the Investing News Network in 2015.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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