Seen as the world’s best investment across board, palladium is a new precious metal whose value jumped 58% for the past year. Its price has quadrupled since 2009.
On December 17th, palladium reached the value of $2,000 an ounce. The material, used in the car industry, has been increasingly sought after since alternative and less polluting fuels have been designed for the past years.
As a matter of fact, 2020 could well be the best year to invest in palladium. However, mines have been facing challenges to extract this “new gold”. On the other hand, its rarefaction might as well increase its value.
Is Palladium a safer investment than gold?
The end of 2019 has been nonetheless surprising for traditional precious metal traders. As the timeless so-called “safest” investment, gold, was sold for $1,300 an ounce, a new metal has revealed to be even more lucrative.
Palladium's record-setting performance stands out this year amid easier monetary policy, trade war uncertainties and global growth concerns: pic.twitter.com/mwKmswtDik
— Bloomberg Canada (@BloombergCA) December 24, 2019
On December 17th, an ounce of palladium was traded for $2,000. Experts have already reckoned this could become a safer investment since it has been widely sought-after in the car industry, that is currently transitioning to less polluting alternatives.
Found for the first time in 1803, palladium is a metal that helps reducing fuels from polluting the environment. Since the European Union has voted restrictive laws on energy resources this year, 2020 is likely to be a year where palladium will have a key role in the car industry.
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A difficult metal to extract
Mines of palladium are becoming rarer: they can mainly be found in Russia, Canada and South Africa, where the production dropped in 2017 because of storms. The country then only extracted 200 tons against 3,.150 tons of gold.
However, it looks like the demand might increase in the next few months. Palladium is also used in the aircraft industry, which is also transition to more environmental-friendly alternatives.
“Tighter environmental legislation is forcing auto makers, who consume more than 80% of palladium production, to use more metal per vehicle — boosting demand even as the global economy and overall vehicle sales slow”, analyzed Reuters.
$2,500 an ounce by mid 2020
As the resource is scarce, prices are likely to reach new highs in the middle of next year. Experts say the value of palladium should break new records by June 2020, reaching about $2,500 an ounce.
“We don’t think this is the top,” shared Philip Newman at consultancy Metals Focus with Reuters. “This (rally) has legs to run, because it is fundamentally driven,” he said.
At the moment, palladium is ahead of gold and platinium, which was traded at $913.64 per ounce the last week of December.
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