The ETFS Physical Palladium Shares (NYSEArca: PALL) is up almost 3% this year. While that does not sound like much, it is a strong performance when considering the savage losses endured by the major physically-backed gold and silver ETFs.
Palladium has proven sturdy do in part to strong fundamentals that include robust global auto demand. The white metal is a key component in the production of catalytic converters in automobiles manufactured in China and the U.S., the world’s two biggest auto markets. [Favorable Conditions Could Boost Palladium ETF]
To go along with PALL’s encouraging fundamentals is a positive technical outlook. The ETF could offer a low risk entry from the long side on a close above $71, says Deron Wagner of Morpheus Trading Group. PALL closed just above that level on Wednesday.
“PALL could still break down beneath the three-week low, so it is best to not jump the gun and wait for a close above $71 before attempting to get long. If $PALL is to stage a significant advance, it will eventually have to clear prior highs around $74,” said Wagner.
On Wednesday, ETF Securities said palladium is among its top commodities picks for 2014, citing a large supply deficit, dwindling Russian stockpiles and increased Chinese and U.S. auto demand. [ETF Securities 2014 Commodity Outlook]
Russia is the world’s largest palladium producer, but the country does not release stockpiles data, prompting some market observers to speculate that the country’s inventories are all but gone.
South Africa is the world’s second-largest palladium producer and supplies of that metal and platinum are expected to be tight there next year as well. Platinum is also among ETF Securities’ top commodities picks for 2014. The firm is the sponsor of the ETFS Physical Platinum Shares (NYSEArca: PPLT).
ETFS Physical Palladium Shares
ETF Trends editorial team contributed to this post.