On the supply side, 2012 may be the sixth consecutive year of declining global mining production, with Russia shifting to nickel production and South Africa bogged down by energy and labor problems.
Consequently, Russia’s strategic stockpile has been a primary source of supply; however, this source may be depleted by 2014. According to Barclays, Russian shipments may drop to 300,000 an ounce this year. Market observers are already estimating a 215,000 ounce shortage for 2012.
The PALL ETF has begun hoarding palladium in anticipation of the dip. The fund now holds 58.9 metric tons of palladium, or a 14% increase in holdings year-to-date.
Consequently, palladium forecasters believe prices could easily hit $850 an ounce at the end of the year, about a 33% increase. In comparison, analysts believe gold could gain 15% and silver add 13%. [Palladium ETF May Soon Outshine Other Metals]
Furthermore, Sprott previously filed for a physical palladium ETF. In the months up to the launch of the fund, the provider will also need to buy the necessary amount of physical palladium to support its share price, further diminishing the amount of palladium circulating in the markets. [Sprott Files Physical Platinum and Palladium ETF]
ETFS Physical Palladium Shares
For more information on the precious metal, visit our palladium category.
Max Chen contributed to this article.