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Palladium Is Shining: A Look at the Market and the Miners

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Palladium Is Shining: A Look at the Market and the Miners PART 1 OF 4

Reading the Palladium Market in 2017

Palladium shines

Palladium is the winner among precious metals over the past month, rising almost 8.0%. It’s been a good year so far for this metal. In the past week, palladium has seen its biggest one-day surge since March 2016. It’s trading at its highest level since 2001. On September 11, 2017, the price of the metal was $935.90 per ounce.

The rise in the metal is partially due to the better-than-expected August sales report for US automakers. Expectations are that areas impacted by Hurricanes Harvey and Irma could soon be replacing its flood-damaged vehicles. The metal is used in catalytic converters that curb pollution from vehicle exhausts. The growing strength in palladium can also be seen in the stock of palladium-based ETFS Physical Palladium (PALL).

Reading the Palladium Market in 2017

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When analyzing the palladium market, it’s important to analyze the gold-palladium spread. The spread is a measurement of the number of palladium ounces it requires to buy a single ounce of gold (GLD). The greater the ratio, the weaker palladium is compared to gold.

The gold-palladium ratio was ~1.41 on September 11, 2017. The price of gold was $1,331.80 per ounce, while the price of palladium was $935.90.

RSI indicator

The RSI (relative strength index) level for the gold-palladium spread is 56.6. When an RSI level falls below 30, there are chances of a rise in price. When an RSI level rises above 70, it indicates that the price might fall.

Mining companies Goldcorp (GG), Alamos Gold (AGI), First Majestic Silver (AG), and Iamgold (IAG) are all impacted by changes in these precious metals.

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