Palladium is often overshadowed by gold and silver and has been lagging these other precious metals in 2011. Still, a palladium exchange traded fund holds about $440 million in assets.
“Among commodities, precious metals such as gold have been widely adopted as inflationary hedges and ‘safe-haven’ assets because of their traditional store of value. Investors should be aware, however, that despite its ‘precious-metals’ designation, palladium is primarily used in industrial applications and is likely to fluctuate with economic ups and downs,” says Morningstar analyst Abraham Bailin in a profile of ETFS Physical Palladium Shares (NYSEArca: PALL).
The ETF is down about 18% year to date to lag gold and silver. [Palladium ETF Jumps 4% in Metals Rally]
Palladium is never going to be a currency alternative like gold; however, the metal does have value as a commodity-like investment. With the advent of the physically backed ETF, the supply side can get stretched as demand increases, explains eBullion Guide.