The Aberdeen Standard Phys PalladiumShrs ETF (NYSEArca: PALL) is up about 7% over the past month, an impressive showing relative to other precious metals ETFs, including those with exposure to platinum, palladium’s nearest rival.
PALL, the only US-listed ETF backed by physical holdings of the white metal, seeks to reflect the performance of the price of physical palladium. PALL is designed for investors who want a cost-effective and convenient way to invest in palladium with minimal credit risk.
“Palladium has outdone itself with an extended run to record highs that began at the start of 2018 and is continuing, with prices up about 40% this year. The gains have come even as sister metal platinum’s recent rally to a more than one-year high failed to hold,” reports Myra Saefong for Barron’s.
For its part, PALL is up about 32% year-to-date, easily making it one of the best-performing precious metals ETFs this year.
The PALL Pulse
Some market observers believe palladium demand will be steady over the next several years, potentially underpinning higher prices for PALL. Palladium is key component used by the car industry in catalytic converters fitted in petrol-powered vehicles to diminish harmful greenhouse gas emissions.
“Palladium and platinum are used in catalytic converters, which help control harmful emissions from car exhausts,” reports Barron’s. “But palladium is primarily used in vehicles with gasoline engines, while platinum is used in those powered by diesels. Diesel represents a small portion of U.S. auto sales—only 2.9% of total vehicles sold in the second quarter, according to the Diesel Technology Forum.”
Meanwhile, some warn that Russia’s strategic stockpile of palladium is close to running out. Matthey estimated that 11.5 million ounces of palladium has been taken out from the inventories over the past decade.
Related: Inside The Powerful Palladium ETF
This year, palladium supply will be in a deficit relative to demand for an eighth straight year. Conversely, rival platinum has had supply surpluses in recent years.
With more countries shifting away from diesel-powered automobiles, palladium and PALL could continue gaining at platinum’s expense.
For more information on the palladium markets, visit our palladium category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.