Among precious metals exchange traded products this year, gold and silver funds are grabbing most of the headlines, but investors should not sleep on palladium. For example, the ETFS Physical Palladium Shares (NYSEArca: PALL) is higher by nearly 15% year-to-date.
Supporting the recent bounce in palladium prices, the China Association of Automobile Manufacturers revealed China’s car market is performing better than expected, with car sales in China jumping 9.8% and its best monthly growth year-over-year, China Business News reports.
As growth improves and inflation rises, we are back to waiting for an eventual Federal Reserve interest rate hike, which may trigger market fears over policy mistakes and potential pressure growth.
For the precious metals market, traders will have to keep close tabs on the Fed as gold has been closely correlated to real interest rates. We have seen gold outperform in negative interest rate periods.[related_stories]
Platinum and palladium also enjoy heavy industrial demand, notably out of the automobile industry where the precious metal is used as an autocatalyst to remove harmful emission particles.
PALL “may be the purest play on palladium given that its price is based directly on the price of physical palladium according to the London Platinum and Palladium Market (LPPM). The fund has performed relatively well in 2016, responding to the general flight to quality that has seen investors moving out of riskier assets and into traditional safe havens such as precious metals and Treasuries,” according to Investopedia.
The ETFS Physical Precious Metals Basket Shares (NYSEArca: GLTR) is an ETF to consider for investors looking for diversified precious metals exposure with the convenience of a single ETF. GLTR provides exposure to gold, palladium, platinum and silver. GLTR works in similar fashion to the aforementioned PALL.
“The fund invests in physical bullion of each of the metals and stores them in a secure London facility. The fund has more than $213 million in assets under management (AUM) and charges an annual expense ratio of 0.6%,” adds Investopedia.
Tom Lydon’s clients own shares of GLTR.