Could Palladium Continue Its Surge?



Palladium continues the surge

The much-discussed Volkswagen scandal gave a push to palladium prices. Palladium, used in autocatalysts for gasoline cars, has risen close to 16% since September 18, 2015. Palladium was the worst-performing precious metal during the July rout. The title of the worst performer is now transferred to platinum.

Platinum, used in diesel catalysts, has fallen 3.4% since the scandal surfaced. The fall is likely backed by investors who speculate that diesel car buyers may now switch to gasoline cars. Palladium and platinum have fallen 11.2% and 21.3%, respectively, on a YTD (year-to-date) basis.

On Thursday, October 8, 2015, platinum and palladium saw gains of 0.97% and 0.52%, respectively. However, platinum is lagging behind all other precious counterparts on a 30-day trailing basis.

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Spreads move opposite

Platinum has historically been priced at a premium over palladium. However, owing to the current turmoil in the prices of both metals, the premium has sunk to its lowest level in almost ten years. The last traded prices for platinum and palladium as of October 8, 2015, were $955.6 and $703.2 per ounce, respectively.

The gold-platinum and gold-palladium spreads that denote the number of platinum/palladium ounces required to buy one ounce of gold have changed in the opposite direction. The gold-platinum spread has risen $1.20, which denotes that a greater number of platinum ounces would be required to buy gold. The comparative value of platinum has seen a downward turn.

Similarly, the gold-palladium spread has witnessed a fall. A drop in spread conveys strengthening palladium with respect to gold. The current spread stands at $1.62 per ounce of gold.

Miners and ETFs

Other precious metals like gold and silver have also seen their prices surge on a 30-day trailing basis. Gold and silver have increased by 3.5% and 8.1%, respectively.

ETFs that have also seen rises in their prices include Global X Silver Miners ETF (SIL) and VanEck Vectors Junior Gold Miners ETF (GDXJ). These rose 16.3% and 10.3%, respectively.

Most mining companies saw increases in their prices on the same basis. Companies like Royal Gold (RGLD), Pan American Silver (PAAS), and Gold Fields (GFI) saw rises of 11.1%, 19.1%, and 1.4%, respectively, on a 30-day trailing basis. These three companies make up 9.9% of the VanEck Vectors Gold Miners ETF (GDX).


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