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Investing in palladium

Palladium has become an increasingly popular commodity among investors. It is used in the production of many industrial and electronic products and is a much rarer material than other precious metals, such as gold. A member of the platinum group metals, palladium has seen a great increase in demand over the years, subsequently increasing its attractiveness to investors.

Along with other precious metals, palladium belongs to the commodities market, all of which you can trade on with our award winning* Next Generation trading platform. Read on to learn more about palladium, its uses, and how you are able to invest in physical palladium, as well as through palladium shares and ETFs.

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What is palladium?

Palladium is a shiny white metallic material that belongs in the same group of metals as platinum. Discovered in the early 1800s, palladium is generally extracted along with other metals, such as platinum and nickel. Miners and companies have projects working with obtaining palladium across the world, with most of it coming from South Africa and Russia.

What is palladium used for?

There are several uses for palladium with its most popular being an integral component for producing catalytic converters for automobiles, as it traps hazardous emissions, which is made possible due to the palladium’s chemical properties. Palladium is also used in the manufacturing of multi-layer ceramic capacitors (MLCC) and for plating in various consumer electronic products. It is highly useful for developing carbon monoxide detectors as palladium chloride readily catalyses carbon monoxide gas to carbon dioxide. It is also beneficial to the dental industry as it is used to create inlays and dental bridges. Since the 1930s, palladium has been used in pieces of jewellery as an alternative to the precious metal, platinum.

Investing in palladium

Investing in palladium involves several different options. One would be to buy and sell palladium at its spot price through share dealing, which reflects the current price that a trader can buy or sell the instrument for at an immediate delivery.

Another method of investing in palladium is to trade via a futures contract. This is essentially an agreement between two parties to purchase and sell an asset in the future, at a fixed price. Read more about forward trading, which follows a similar process to futures contracts. Palladium can also be traded on via spread bets and CFDs, which are derivative products that are explained in more detail below.

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Trading on palladium

Spread betting and CFDs are popular methods for trading on commodities such as palladium, which can be accessed on our Next Generation trading platform. Spread betting is a tax-efficient** way of speculating on the price movements of the underlying assets. CFDs allow traders to purchase or sell a number of units of an asset with the difference in price being exchanged at the end of the contract.

Open an account today to start trading on palladium.

Factors affecting the price of palladium

There are many aspects influencing the demand for palladium, with one of the main factors being the car industry. In Europe, consumers have increasingly switched from diesel-run vehicles to petrol vehicles, which mostly use palladium rather than platinum in their catalytic converters. The behaviour of the dollar is also an influential factor affecting the demand for palladium. For example, if the dollar depreciates in value against the Russian Ruble, for Russian palladium producers receiving revenue in US dollars, profit margins may take a hit. Consequently, this would act as an incentive to decrease the supply of palladium to the global market, thus increasing the price for the precious metal. Constraints around supply also affect price levels, because palladium is generally a secondary product to platinum and nickel, miners find it difficult to increase its extraction and output. A large percentage of palladium is mined in South Africa and increased costs of construction and fuel have affected palladium output levels in the past which therefore resulted in higher prices.

Over the years, palladium has become one of the most expensive precious metals and many investors began to view palladium as a safe haven asset.

View our palladium price chart in order to find more details about margin rates, holding costs and trading hours.

Trading palladium through commodity indices

Our platform also offers traders the option to spread bet or trade CFDs on different collections of commodities, such as our Agricultural Index, Energy Index and Precious Metals Index. Commodity indices give traders the opportunity to diversify investment portfolios by having exposure to multiple commodities in one trade.

Our Precious Metal Index enables you to trade on palladium, as well as a number of other precious metals, through a basket of commodities. This product tracks the underlying prices of the commodities, all in one single position. Palladium makes up 15% of the index, and its price action would have an effect on the overall value of the index. If palladium’s price rises, then the overall value of the index may increase, and vice-versa.

The Precious Metal Index allows traders to have increased exposure in palladium as well as other metals without placing complete reliance in one commodity. However, it is important to be aware of the fact that other precious metals, such as gold, can be rather volatile assets in the short-term, which may have a subsequent effect on the basket’s value.

Palladium stocks

Rather than investing in the commodity itself, with our Next Generation platform, you also have the option to spread bet or trade CFDs on a range of palladium stocks. Palladium stocks are the shares of companies that are involved in dealing with palladium, whether this be mining, refinement or production of other consumer goods using the precious metal.

Below is a list of some of the palladium stocks you can trade on with our platform.

A-Mark Precious Metals (AMRK)

Established in 2013, A-Mark Precious Metals is a company involved in the trading of precious metals. It is a wholesaler and distributor of commodities such as gold, silver and palladium bullion. A-Mark’s coin and bar segment deals in over 200 products, including palladium bars and ingots. These products come in a range of shapes, sizes and weights. The industrial unit of the company sells and distributes palladium to industrial and commercial users.

Sibanye Stillwater (SBSW)

This multinational precious metals mining company operates across the globe, including countries such as the United States, South Africa and Argentina. In 2019, Sibanye Stillwater completed the acquisition of one of the top platinum group metal producers, making it one of the world’s largest producers of palladium. The company is also a leading processor and recycler of used catalytic converter materials.

Ivanhoe Mines (IVN)

The Canadian mining company’s main projects involve developing and recovering precious metals, mainly in Southern Africa. One of its principle projects is the discovery of metals, including palladium and gold, in South Africa. Ivanhoe Mines has a partnership agreement with China Nonferrous Metal Mining (Group) to explore the development and acquisition of mineral projects and opportunities in Africa.

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Palladium ETFs

Our platform offers the opportunity to trade on palladium ETFs. Exchange-traded funds (ETFs) are investment funds that consist of a compilation of relevant stocks with the purpose of tracking and reflecting the performance of popular stock indexes; in this case, for palladium and precious metals. Therefore, traders are able to indirectly invest in a collection of stocks through spread bets and CFDs for companies that engage in the exploration, distribution and production of palladium.

Our platform offers a number of palladium and precious metal ETFs to spread bet and trade CFDs on, including the following:

Make sure to keep an eye on our trading platform, as there may be additional ETFs to trade on in the future.

It is important to note that leveraged ETFs are complex financial instruments that carry significant risks. Certain leveraged ETFs are only considered appropriate for experienced traders.

How to trade palladium with CMC Markets

In summary, palladium has experienced an increase in demand over the years, resulting in a growth in popularity among many investors. We offer a number of stocks and ETFs, as well as the physical palladium commodity, to spread bet and trade CFDs on through our web-based trading platform, Next Generation.

Open an account now to start spread betting and trading CFDs, and discover more of our platform features through our library of platform video guides. You can keep up to date with the palladium and precious metal industry news with our news and insights section, which contains fundamental analysis reports from Morningstar and news updates from Reuters.

FAQ

What is palladium used for?

Palladium is used as an integral component for producing catalytic converters. It is also used in the manufacturing of multi-layer ceramic capacitors (MLCC), carbon monoxide detectors, and for plating in various consumer electronic products. Palladium is a precious metal and makes up 15% of our Precious Metals Index.

How can I trade on palladium?

You can trade on palladium by spread betting or trading CFDs on palladium stocks and ETFs, as well as the physical palladium commodity. We offer a wide range of asset classes to trade on with our Next Generation trading platform.

How valuable is palladium?

Palladium is one of the most valuable precious metals, along with gold, silver, and platinum. It is also considered one of rarest precious metals. View our palladium price chart in order to find more details about margin rates, holding costs and trading hours.

What are some examples of palladium stocks?

Examples of palladium stocks include multinational precious metals companies such as A-Mark Precious Metals, Sibanye Stillwater Ltd and Ivanhoe Mines Ltd. These stocks can be traded on through spread bets and CFDs on our Next Generation trading platform.

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