Palladium is a type of precious metal. It was discovered relatively recently in human history, in 1803, and is silver/white in colour. Palladium is similar in many respects to platinum, with which it shares several of its most useful qualities. It is an extremely resilient metal, being resistant to damage from heat or exposure to other chemicals, and is also difficult to tarnish. It is also extremely ductile and so can be easily shaped and worked. One of its more unique qualities is its ability to absorb large amounts of hydrogen, up to 900 times its own volume. Palladium is considered to be a chemically stable metal.
Palladium futures as a commodity are traded at several exchanges, such as the New York Mercantile Exchange (NYMEX), where is traded under the ticker symbol PA. Another commodity exchange carrying palladium as a product is the Tokyo Commodity Exchange (TOCOM), and there its ticker symbols are: internal code – 14; Reuters Contract – TCE/JPA, Bloomberg Ticker – JMA.
Palladium has several special features as a commodity. One of the most salient features to note for traders in futures contracts is that palladium, despite its status as one of the main internationally traded precious metal commodities, has not seen such a significant rise in price as other precious metals like gold or silver. This does not reflect on the quality or usefulness of palladium as a material however, as it is estimated that one out of every four goods manufactured today will contain at least one component made from either palladium or platinum, owing to their admirable qualities as materials, as described above. This means that the market for palladium is large while the palladium price per ounce is currently comparatively low, which is an enticing combination for those involved in commodity trading. Palladium is also different to gold in terms of investment, in that prices of gold usually rise when the economy is in a slump. Palladium price charts will show that the opposite is true of the palladium price however; it decreases when the economy is down. Palladium trading is therefore a potentially lucrative source of income for the attentive speculator on the commodity market.
Palladium has a wide variety of uses, and this is reflected in the number of consumer and business markets in which it appears. Palladium enjoys status as luxury material used in the construction of jewellery, in much the same way as platinum. It is also favoured for use in many electronic applications, where it provides components for computers, mobile phones and televisions. Palladium also has more industrial uses, such as its use in hydrogen isotope storage and in groundwater treatment. The manufacture of fuel cells is another industrial application which is reliant on palladium’s ability to store hydrogen.
In terms of production, Russia is believed to be the most prolific producer of palladium, providing around 70% of the world’s supply. South Africa makes up most of the remaining percentage; partly owing to the fact that palladium is also produced as a by-product of nickel mining. The largest consumer market for palladium is the automotive industry at present, with palladium frequently replacing platinum as the material of choice for a number of components.
For those interested in entering the palladium market, there are numerous factors to consider when looking at the palladium spot price and the price of palladium futures. Firstly, palladium is a rare metal, 30 times rarer than gold. Supplies are also finite, and as it grows in popularity as a raw material, it is likely that demand will start to significantly outstrip supply, which will drive palladium prices and the price of palladium futures up. Secondly, any resurgence in the jewellery market will likely see palladium rise in price. The same can be said for any increase in the automotive industry, where palladium is frequently used in catalytic converters. Any growth in the economy that leads to expansion of the automotive industry will have a marked effect on palladium trading.
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