South Africa is the world’s largest platinum producer and second-largest palladium producer behind Russia. Russia does not release palladium production data and several years, traders have speculated the country’s stockpiles of the white metal, used to produce catalytic converters in American and Chinese automobiles, are dwindling.

The palladium market is expected to experience a large deficit this year, with demand outpacing supply by at last 850,000 ounces, or 10% of global supply. On the supply side, palladium mine supply has been declining by an annual rate of 2% since 2007. [Palladium ETF Could Shine]

ETFS Physical Palladium Shares

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of GLD and SLV.