As gold and silver ETFs have rebounded since early July, palladium is again being lost in the shuffle, but robust demand says investors should not forget about the white metal and the ETFS Physical Palladium Shares (NYSEArca: PALL).

Although the major physically-backed gold and silver ETFs have been pummeled this year amid fears the Federal Reserve will tapering its bond-buying activities and speculation that gold’s 12-year bull market helped create an asset bubble, PALL has remained sturdy. The lone palladium-only ETF listed n the U.S. is up nearly 6% year-to-date. [Institutional Investors Take Interest in Palladium ETF]

More gains could be on the way. Greater demand for automotive vehicles could help boost palladium prices. Palladium is used to manufacture autocatalysts found in gasoline vehicles. The device helps convert toxic particles in the exhaust of an internal combustion engine to less toxic byproducts. The world’s two largest auto markets, China and the U.S., use palladium in the production of catalytic converters. [Higher Auto Sales Could Boost Palladium ETF]

The medium- to long-term supply/demand forecast is also favorable. Demand will exceed output by 1.33 million ounces in 2013, more than North America produces in a year, Joe Richter and Debarati Roy reported for Bloomberg, citing Morgan Stanley. Credit Suisse anticipates deficits through at least 2016, and researcher CPM Group says mines won’t catch up for a decade, according to Bloomberg.

Adding to the bullish outlook for palladium futures and PALL is speculation that sales from Russia, the world’s largest producer of the metal, are expected to fall. Russia does not reveal exactly how large its palladium reserves are, but some market observers have theorized the country’s output has been declining for several years. Additionally, political volatility and labor strife in South Africa, assuming either scenario flares up again, could crimp output from the world’s second-largest palladium producer. [Platinum Supply Deficit Seen Easing ETF Losses]

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