Palladium is the strongest precious metal
Although palladium has been the strongest among the four precious metals over the last month, it has fallen 9.8% year-to-date. This decline may have resulted from lower automotive demand in the Asian markets, especially China. Palladium was trading at $943.00 while gold was trading at $1,253.70 on June 28 at 7:30 AM EDT.
Like silver, palladium often depends on industrial sentiment. It sometimes reacts more closely to the broader equity markets than its precious metal status. The diesel engine’s relative loss of favor to the gasoline engine over the last few quarters has boosted palladium demand.
The relationship between gold and palladium can be assessed using the gold-palladium ratio, which measures the number of palladium ounces required to buy a single ounce of gold. The gold-palladium spread is 1.3, indicating that it requires ~1.3 ounces of palladium (PALL) to buy an ounce of gold.
This ratio fell steeply in 2017 as palladium approached par with gold (GLD). Palladium has decreased 10.1% on a year-to-date basis, while gold has declined 3.5%.
Mining companies react to changes in precious metals. Last week, miners Eldorado Gold (EGO), Hecla Mining (HL), Coeur Mining (CDE), and Harmony Gold (HMY) fell 7.0%, 4.2%, 3.1%, and 3.1%, respectively.
In the next part of this series, we’ll look at the gold-platinum ratio.