Palladium A Reliable Option For Portfolio Diversification Through Precious Metals Investing

Palladium A Reliable Option For Portfolio Diversification Through Precious Metals Investing 5.00/5 (100.00%) 2 votes

Of all the precious metals in all the commodities exchanges in the world, palladium probably has the least publicity. First in the public’s mind when it comes to investing in precious metals are gold, then silver, then platinum before palladium.

However, palladium deserves due for its ability to help investors diversify and stabilize their portfolios over time, as the rest of the market ebbs and flows without end.

That said, here is some information to bolster palladium’s public pervasiveness:

Why Palladium?
Maybe the better question to start is, Why precious metals investing altogether?

Precious metals are a steadfastly reliable way to ensure long-term gains – especially in times of economic downturn. When common stock and money markets begin to dip, especially over protracted periods, Wall Street skittishness tends to redirect money from more traditional trades toward those in gold, silver, platinum, palladium and so on.

This reallocation of market funds tends to drastically bolster each precious metal’s market value. (Try to remember all those supply and demand charts from your Thursday morning freshman economics courses, if you can.) Though this offers temporary relief and limited recuperation of stock and money market losses for those that buy in on the fly, precious metals investing as a sensible, preconceived strategy is quite profitable – especially during times of broader economic struggle, when it matters most.

With that question answered, now’s probably a good time to establish palladium as a supplement to buying up gold.

Why Palladium Over Gold?
Again, to rephrase the question, we might be better off asking, Why palladium in addition to gold? Because when you consider the behavior of both in the broader scope of precious metals investing, they’re quite an effective one-two portfolio punch together.

As discussed in the previous section, precious metals tend to see the most activity during times of economic downturn. This holds true for gold more than all of the others, simply because of its longstanding reputation and pervasiveness in our culture. As a result, gold is at its most valuable – even with regard to other precious metals – during times when investors begin to lose money in stock and money markets. In other words, this is when the rest of the economy begins to slip for something of a prolonged period.

Palladium, though, is at its most valuable when the rest of the market is booming.

Because of its popularity for use in catalytic converters of cars, much of the health and success of the palladium trade lies in that of the automotive industry, which since its inception has proven itself one of the most reliable markers of the general state of the economy. In other words, a good economy means high palladium prices.

So, ideally, investors would pile considerable shares of both in their portfolios, so as to be equipped with the best means to bolster booms and cushion against slides.

Relative Price of Palladium
A good question worth answering when considering palladium and investing in precious metals: how much palladium can I get relative to gold, silver, platinum and others?

During the 2001 boom of the automotive industry (again, furthering the need for catalytic converters and, thus, palladium), prices hit a than-all-time high of $1,100 per ounce, or, in 2009 dollar terms, $1,340 per ounce. Though palladium prices dipped a bit when the rest of the economy tanked in 2007, they’ve about reestablished this level since.

Gold, meanwhile, is typically traded between $1,500 and $1,800 an ounce.

For many, then, it may be wise to buy up a larger store of palladium, so as to best maximize the incremental gains of each unit, than a smaller store of gold.