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Sunday, 31 March 2019

Palladium Continues Record Run as Supply Worries Intensify

Palladium has been staging record highs for the better part of the last seven months, outstripping even the most bullish forecasts made during 2018 as a supply squeeze inflated the metal’s price.
Palladium has been staging record highs for the better part of the last seven months, outstripping even the most bullish forecasts made during 2018 as a supply squeeze inflated the metal’s price.
Recession woes have spread over the investment environment of late and the latest developments in debt markets have hit financial equities hardest. An acute selloff across equity markets spurred leveraged short-selling as investors are bracing for a dismal earnings season. The Brazilian administration is facing an uphill political struggle to fix a burdening social security system while the U.S. dollar closed the list after a dovish central bank decision. Check our previous trends edition at Trending: Transport Equities Up Despite Lack of Progress on Trade

Supply Constraints Take Palladium to Uncharted Territory

The precious metal widely used in the automotive industry has nearly doubled in value since last August as a demand-fueled rally continued with supply woes in an already tight market. Palladium has seen its viewership rise 75% over the last week as prices hit a new record, breaking the $1,600 per ounce barrier.
Most recently, a Russian ban on several metal exports hit the palladium market and supported prices despite an estimated slowdown in vehicle sales. The world’s top palladium producer is weighing a ban on precious metals scrap and tailings to promote domestic refining of the materials. Another impetus for its price, the Chinese stimulus plan may spur demand even further as the Asian behemoth hosts the largest auto market.
The record run for the metal primarily used by automakers for catalytic converter manufacturing has also been backed by several mining strikes in the world’s second largest producer, South Africa. Nearly 60% of the global palladium production goes into catalytic converters and 95% of the vehicles sold in Europe are equipped with such a device.
A play into the palladium territory, Aberdeen Standard Physical Palladium Shares ETF (PALL A) stands to gain over the long run from a perfect secular backdrop for the metal’s bull run stemmed from an ever-tightening cycle of vehicle emissions regulation. Despite losing some ground over the last few days, a reaction to growing fears of a recession, the ETF still holds a nearly 13% year-to-date performance. Use our “head to head comparison tool”:http://etfdb.com/tool/etf-comparison to compare two ETFs such as (PALL A) and (EZA B+) on a variety of criteria such as performance, AUM, trading volume and expenses.

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