The palladium party: what the experts think

● Investors’ pal?

Palladium, the metal most known for its use in catalytic converters, has been on a tear of late, said David Hodari in The Wall Street Journal. Prices have climbed by more than 50% since mid-august – making palladium “more expensive than gold”. The UK online dealer Bullion By Post was this week quoting a price of £1,096/per ounce, compared with £1,022 for gold. Palladium’s soaring price has spawned a mini crime spree – thieves in America are increasingly targeting cars for their catalytic converters. But the question for investors is whether there is any more mileage in the boom. Has the palladium bandwagon already left town?

● Supply tightness

The market will probably remain strong, said Bloomberg. In November, analysts at Citigroup described “an extreme tightness” in supply – which is still the case now. Stricter environmental standards globally have also fuelled demand. Even if the global car market hits the doldrums, the growing preference for petrol vehicles over diesel should continue to drive palladium consumption. Another factor driving the price is that some “80% of primary palladium supply arises from regions with high political risk”, such as Russia and South Africa, said Lorna Nicholas on Smallcaps.com. According to North American Palladium, the world’s only “pure play” producer, that has helped fuel a “deficit” in the rare metal that is likely to widen this year. All in all, “the market has a very positive fundamental outlook”, said Maxwell Gold of Aberdeen Standard Investments.

● How to invest

There are plenty of ways you can invest in palladium. Holding bullion, in the form of coins or bars, is one option. You could also track the metal’s price via an exchange-traded fund, or invest directly in palladium miners. The world’s largest producer is Russia’s Norilsk Nickel, which has so far avoided US sanctions applied to other Russian metal groups, like Rusal. If you think that’s a risk too far, look to South Africa where “the rally in palladium” has been helping offset “the gloom enveloping” the country’s platinum industry, following a slump in the price of that metal to a near-decade low, said Felix Njini on Bloomberg. For South African miners like Impala, Sibanye and Lonmin, palladium has proved “a lifeline”.