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Palladium Rises and Leaves Platinum Behind

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Is palladium the best performing bullion?

Palladium futures for December delivery rallied on Thursday, October 1 to $679.40 per ounce. It rose 4.37% from its close the day before. Palladium’s 30-day trailing gain is ~16%. In contrast, platinum fell 0.43% on Thursday. It had a 30-day trailing loss of ~11%. The gold-platinum spread and the gold-palladium spread denote the number of platinum and palladium ounces, respectively, it will take to buy a single ounce of gold. The spreads give the relative strength indicators for both of the metals with respect to gold—the leading precious metal.

 

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Platinum’s premium over palladium

The above chart shows a bright rising gold-platinum spread, which indicates that platinum is getting weaker compared to gold. In contrast, a lowering gold-palladium spread demonstrates that it will  take fewer ounces of palladium to buy one ounce of gold. Palladium is gaining some strength while platinum is losing.

Currently, platinum’s premium over palladium is trading at the lowest level in 13 years. This is due to concerns about the Volkswagen emissions scandal. When the company’s emissions debacle surfaced, palladium emerged as a winning precious metal. Platinum is mainly used in devices that curb the harmful gases from diesel cars. It fell ~8% since mid-September. In the same period, palladium rose ~11%.

Changes in the prices of these two precious metals can also have a significant impact on mining companies. Businesses that have lost immensely due to falling precious metal prices include Coeur Mining (CG), New Gold (NGD), and Primero Mining (PPP). These three stocks account for 4.27% of the VanEck Vectors Gold Miners ETF (GDX). ETFs that have seen a fall in their prices on a five-day trailing basis include the Global X Silver Miners ETF (SIL) and the SPDR Gold Shares (GLD).

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