How Palladium eclipsed gold

In the last four months one precious metal has been quietly rising higher. It’s not gold or silver (although they have been doing well) and it’s not platinum either, which usually gets a lot of attention but Palladium. In the past couple of months Palladium has surged almost 50% higher. It has reached and surpass end the $1,255.12/ounce price outperforming gold for the first time in 16 years.

Palladium which happens to be one of the platinum group metals (PGMs) has been seeing a rising demand in the auto industry. Almost 80% of the world’s palladium goes into the auto manufacturing industry. So, if there is a surge in demand from that sector, there will be a demand for more palladium. This metal is commonly used in petrol engines whilst platinum is used in diesel engines. This means that the world is switching away from the heavy diesel powered vehicles to petrol engine automobiles. More specifically palladium is used in the manufacture of catalytic converters that are responsible for reducing emissions from petrol vehicles.

Palladium is also used in the production of medical instruments and dental alloys. It is also used in the manufacturing of some electronics. The sudden and strong rise in the price of palladium means that the amount that is being supplied is not nearly enough for the demand out there. So simply put, the laws of supply and demand played a significant role in the recent rise in palladium prices.

The demand has gone up not only because there are more cars being manufactured but because of the tight legislations around emissions. It is estimated that catalytic applications will rise to a record high of 8.5 million ounces this year alone. Already, the amount of palladium produced on a yearly basis has been 1.2 million ounces, which means the automobile industry has a huge deficit to make up for.


Miners have found it hard to keep up with rising demands. In South Africa (which is one of the world’s foremost producers of PGMs like Palladium) mining companies have had to face disruptions due to labour strike. The current leading producer of Palladium in the world is the Russian company, Norlisk Nickel. It recently announced its plans to invest 12 more billion dollars to expand the mine and increase producing in the next five years. The downside is that the much needed palladium may be late in coming into the market if electric cars come into the market at a faster rate. For now and for the next 3 to 5 years the price of Palladium is set to be high provided vehicle sales do not go down. Investors seem to have moved their focus away from gild to Palladium. According to market analysts, palladium EFTs up to 12.3% in one year, while gold EFTs fell by 6.4%.


Investors who had Palladium to sell this year, made big money. Investors will continue making a killing if petrol vehicle sales grow in 2019 and beyond. Electric cars may pose a threat, but the world has been slow in the electric vehicle revolution. So, as long as there is a need for petrol fired engines, there will be a demand for more palladium in the automotive sector.