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Palladium is a new kid on the block for metal investors. It’s a super rare metal and was only discovered in the 1800s. Similar to platinum, it looks silver in colour and wasn’t particularly popular until recently. However, that’s all changed and it is currently in high demand. It costs around 50% more than gold and is one of the most valuable metals in the world.
Around 90% of palladium is currently used in the manufacture of car exhausts. And demand is likely to remain high as trace amounts are also used in the manufacture of electronics, dentistry, medicine, hydrogen purification, chemical applications, groundwater treatment and jewellery.
Ways to invest in palladium stocks
If you want to take the plunge and invest in palladium you have several options. You can invest through a share dealing account, a stocks and shares ISA, or through your pension scheme.
Once you’ve chosen an investing platform you can start researching which fund, commodity or stock you want to purchase.
Here are the steps you need to take to set up a share dealing or trading account:
- Pick a trading platform or broker and create an account. You may need to provide ID as part of the sign-up process.
- Fund your account by adding money to your trading account. Most trading apps and platforms accept bank transfers and credit card payments.
- Make your investment. Search for a palladium investing vehicle on your platform, and then submit a buy order.
Strategy 1
Invest in palladium ETFs
ETFs or exchange traded funds can be a great way to diversify your investment by spreading it between several assets. There are two types of palladium ETF: one tracks precious metal futures, and the other invests in metal mining stocks. Here are some of the main pros and cons of investing in palladium through an ETF:
Pros
- They are a low cost way to get exposure to commodity investment.
- You can choose between a pure palladium ETF or one that invests in a range of precious metals.
Cons
- ETFs are made up of a collection of assets so you lose some of the control you might have had over an investment in a single stock.
Compare brokers to buy palladium ETFs
Strategy 2
Invest in palladium stocks
Investing in palladium stocks means you’ll buy shares in companies that mine palladium.
Pros
- Costs are low as you’ll own the stocks directly.
- You’ll have control over your investment and can buy or sell shares when you want.
- You can pick stocks that fit with your investing goals or ethics.
Cons
- Less diversified than investing through an ETF.
- Valuable metals are volatile and vulnerable to market price fluctuations.
Compare brokers to buy palladium stocks
Strategy 3
Invest in palladium futures
Investing in palladium futures isn’t for the faint hearted. You’re agreeing to buy stocks in a commodity at a set price, which you will then receive some time in the future. You’re aiming to buy stocks at a lower price than they would otherwise be, but you might be caught out if the price moves in the opposite direction to your predictions.
Futures trading is very risky and you’ll need a strong constitution and good understanding of stock trading.
Pros
- Under the right conditions, you can make big returns.
- Futures give you direct ownership over your stocks.
Cons
- Futures are very risky and you could potentially lose a lot of money.
- Futures only last for a set time period and will expire if you fail to use them.
Compare brokers to buy palladium futures
Strategy 4
Buy palladium bullion
Rather than investing in palladium stocks, you may decide to invest in physical palladium bullion. You can buy bullion ranging from an ounce to 5 or more kilograms.
Owning physical palladium bullion is a longer-term investment and it may be harder to sell than other types of palladium investment. Like other investments, physical palladium prices are still influenced by the market.
Pros
- Direct control over your asset.
- Selling your assets can bring great returns.
Cons
- It can take a long time to find a buyer for your assets.
- Buying physical palladium makes you vulnerable to fraud.
- You’ll have to find somewhere to store your bullion.
3 palladium stocks to consider
Norilsk Nickel
Norilsk Nickel is a Russia-based mining company and is the top palladium producing company in the world. It currently mines around 40% of the world’s total production. It’s also one of the world’s top producers for platinum, nickel and copper.
Despite the huge spike in palladium prices, Norilsk Nickel’s share price is currently in the doldrums due to the ongoing conflict in Ukraine.
Its share price is down 89.9% in the past month and 90.9% in the past 6 months as investors have been piling out of Russian stocks.
The fall reflects turbulent market conditions for Russia’s commodity companies. At the time of writing, Moscow-listed stocks are currently suspended from trading on the London Stock Exchange as part of the sanctions against Russia, following the conflict in Ukraine. The Russian ruble has almost halved against the dollar in the last month.
With the situation in Ukraine and Russia so uncertain, this is an extremely risky stock to purchase and it’s possible that prices may fall further, depending on the outcome of the conflict.
Compare brokers to buy Norilsk Nickel shares
Sibanye-Stillwater
Sibanye-Stillwater is one of South Africa’s biggest miners, as well as one of the largest platinum and palladium producers in the world. It has mining operations in South Africa and the Americas.
Its share price is up 32.1% in the last month and 34.6% in the past year.
With the future of Russian palladium production unclear, it’s likely that demand for South African palladium will remain strong. Several Western companies have indicated that they are looking to redirect supply away from Russia in the future. This could lead to increased future profits for other non-Russian palladium mining companies like Sibanye-Stillwater.
It’s possible that production will see significant disruption during 2022, as unions have recently announced strike action over a pay dispute.
Compare brokers to buy Sibanye-Stillwater shares
Anglo American Platinum
Anglo American Platinum is best known for its platinum production, but it is also one of the world’s biggest palladium producers. The majority of its mining operations are based in South Africa.
Its share price is up 29.6% in the past month and 62.4% in the past 6 months. This price increase reflects a recent announcement that Anglo American Platinum expects to report a 166% increase in profits for 2021. The increase in profits is largely due to increased platinum production during the period.
Compare brokers to buy Anglo American Platinum shares
Compare providers for access to palladium ETFs and more
Table: sorted by promoted deals first
Why is palladium suddenly so valuable?
Not long ago, palladium was less valuable than platinum. But recent manufacturing uses have stoked demand and prices are now sky high.
Palladium prices have risen due to a classic combination of high demand and low supply. The metal is very rare and is only mined in a few areas in South Africa, United States, Canada and Russia.
The recent conflict in Ukraine has added further to palladium prices as a large amount of palladium mining takes place in Russia.
Increased demand has been fuelled by tightening regulations on vehicle emissions and the reduced popularity of diesel vehicles. Petrol catalytic converters use palladium whereas diesel vehicles mainly use platinum.
Experts expect the price of palladium to continue increasing over the next couple of years before finally dropping off. It’s likely that new emerging technologies will use cheaper platinum in catalytic converters.
What is palladium used for?
Palladium is in demand for many different uses including the following:
- Catalytic converters for petrol cars, currently the main use of palladium
- Jewellery, sometimes used as an alloy with white gold
- Dental fillings and crowns
- Laptop computers and mobile phones
- Chemical treatments
Pros and cons of investing in palladium
Pros
- Potential to benefit from price increases if demand continues to outstrip supply.
- Can be a good way to diversify your portfolio if you don’t currently invest in commodities.
Cons
- Prices are extremely volatile. They rose to $3,000 per ounce in May 2021 before plummeting to $1,600 in December 2021. Palladium is now worth around $3,000 in early 2022 as the conflict in Ukraine is provoking fears of palladium shortages.
Bottom line
In times of stock market volatility, investors tend to see commodities, including palladium, as a safe investment. However, you still need to ensure that you diversify your portfolio as no investment is truly safe. Make sure you do your research and ensure you are aware of the risks involved before you take the plunge.
Frequently asked questions
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