A Breakout Looms for Palladium

January 17th at 9:00am by Tom Lydon

Of the four largest exchange traded funds backed by physical holdings of each of the four major precious metals, just one could muster a 2013 gain.

Comprised of the SPDR Gold Shares (NYSEArca: GLD), iShares Silver Trust (NYSEArca: SLV), ETFS Physical Platinum Shares (NYSEArca: PPLT) and the ETFS Physical Palladium Shares (NYSEArca: PALL), the group was led in 2013 by PALL. The trend is repeating again this year with PALL already up 4.3%, enough make the best of the four aforementioned ETFs, though PALL’s lead over PPLT is narrow. [Commodity ETP Assets Plunge in 2013]

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. That durability could be a harbinger of an imminent breakout. [Palladium ETF Poised for More Upside]

“There is one chart that really really stands out to me. And that is the weekly chart of Palladium,” writes J.C. Parets of Eagle Bay Capital. Parets notes that palladium’s all-time, set in 2001, is around $1,100 an ounce, “That’s currently 50% above today’s prices. I like that, it gives us plenty of room. But also notice this pattern of converging trendlines that’s developed over the last couple of years since that 2011 decline.”

Chart Courtesy: thechartstore.com via J.C. Parets

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