The ETFS Physical Palladium Shares (NYSEArca: PALL) is up almost 3% this year. While that does not sound like much, it is a strong performance when considering the savage losses endured by the major physically-backed gold and silver ETFs.
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. [Favorable Conditions Could Boost Palladium ETF]
To go along with PALL’s encouraging fundamentals is a positive technical outlook. The ETF could offer a low risk entry from the long side on a close above $71, says Deron Wagner of Morpheus Trading Group. PALL closed just above that level on Wednesday.
“PALL could still break down beneath the three-week low, so it is best to not jump the gun and wait for a close above $71 before attempting to get long. If $PALL is to stage a significant advance, it will eventually have to clear prior highs around $74,” said Wagner.
On Wednesday, ETF Securities said palladium is among its top commodities picks for 2014, citing a large supply deficit, dwindling Russian stockpiles and increased Chinese and U.S. auto demand. [ETF Securities 2014 Commodity Outlook]
Russia is the world’s largest palladium producer, but the country does not release stockpiles data, prompting some market observers to speculate that the country’s inventories are all but gone.