Palladium is a bright metal with many uses in electronic and industrial products. It is one of six metals in the platinum group, including platinum, rhodium, ruthenium, iridium, and osmium. Most of the world's palladium supply comes from Russia, South Africa, Canada, and the United States. Palladium is rarer than gold by a factor of 30. It can be flattened into sheets and employed in fuel cells and solar energy applications.
Basics
Palladium, a lustrous silvery element denoted by atomic number 46 in the periodic table, finds extensive utility across diverse industrial domains, including electronics, manufacturing, dentistry, medicine, chemical processes, jewelry craftsmanship, and groundwater remediation. This uncommon metal predominantly emanates from mining operations in the United States, Russia, South Africa, and Canada, collectively constituting the primary global sources.
Palladium: A Precious Component in Modern Technologies
Palladium, an essential element in electronics and advanced technologies like fuel cells, has become attractive to investors due to its irreplaceable nature, particularly in catalytic converters. Belonging to the platinum group metals (PGMs), along with platinum, rhodium, ruthenium, iridium, and osmium, it plays a pivotal role in various industrial applications.
Remarkably, palladium is a staggering 30 times scarcer than gold, a scarcity that profoundly influences its pricing on commodities markets. In April 2021, it achieved a historic peak, surging to over $2,930, contrasting sharply with its record low of $41.70 back in August 1977.
In the year 2021, human mining activities yielded over 200 metric tons of palladium, with Russia leading the production at 80 metric tons, followed by South Africa at 74 metric tons and Canada at 17 metric tons. The United States contributed 14 metric tons, and Zimbabwe produced 13 metric tons.
The price of palladium experienced relative stability, hovering between $100 and $150 per ounce during 1986-1996, but underwent a remarkable spike in 2001. Subsequently, from 2001 to 2016, its price exhibited higher volatility compared to earlier periods. However, a steady ascent commenced, surpassing the $1,500 threshold in February 2019. Since April 2021, palladium has been experiencing a gradual decline.
Palladium's Evolution: From Serendipitous Discovery to Multifaceted Applications
Discovered in 1802 by William Hyde Wollaston, palladium's origins trace back to an accidental revelation during the dissolution of platinum in a mixture of nitric acid and hydrochloric acid. Wollaston aptly christened the newfound substance after the asteroid Pallas, initially preferring to retain the discovery's confidentiality and marketing it privately as a silver alternative.
However, skepticism among fellow scientists, who considered palladium merely an alloy of other metals, compelled Wollaston to disclose his breakthrough to the Royal Society of London. As awareness of palladium spread, it found application in tuberculosis treatment, albeit with notable adverse effects, eventually leading to its cessation as a therapeutic option.
In 1939, palladium ventured into the realm of jewelry, but its ascent to prominence materialized in the late 1980s. The automotive industry embraced its utility in catalytic converters, catalyzing many applications across diverse sectors, including dentistry, watchmaking, computing, photography, electronics, and hydrogen purification.
Palladium's Advantages
Incorporated into jewelry in 1939, palladium, when alloyed with yellow gold, surpasses the strength of white gold. A notable milestone occurred in 1967 when the government of Tonga introduced palladium coins to commemorate King Taufa Ahau Tupou IV's coronation, marking the inaugural use of palladium in coinage.
Palladium outshines gold in terms of durability and hardness, albeit at a higher cost per ounce. Its remarkable malleability allows metalworkers to fashion ultrathin sheets as thin as one-two hundred fifty thousandths of an inch. When worked at room temperature, pure palladium gains increased strength and hardness, finding applications in solar energy and fuel cell technologies.
Furthermore, palladium's prominence prevails in catalytic converters, which act as an exceptional catalyst to expedite chemical reactions. Palladium underscores its durability in industrial applications with a 12.6% greater hardness than platinum.
Palladium Investment Strategies
Investing in palladium presents various avenues for prospective investors. One straightforward approach is to consider palladium-focused exchange-traded funds (ETFs) such as the Sprott Physical Platinum and Palladium Trust (SPPP) or the Aberdeen Physical Palladium Shares (PALL). These ETFs meticulously track physical palladium, eliminating the need for personal storage while affording exposure to its intrinsic value.
Alternatively, investors can opt for direct investment in physical palladium bullion. However, this approach entails expenses associated with the storage and transportation of the metal. Another avenue entails investing in the stocks of companies engaged in palladium-related activities, typically encompassing mining and sales. It is worth noting that such companies often mine a range of metals, not limited to palladium, potentially diversifying your exposure beyond palladium alone.
Conclusion
Palladium, primarily sourced from Russia, South Africa, and Canada, surpasses platinum in strength. Its versatile applications span across dentistry, automotive, manufacturing, and electronics. Since its widespread adoption in the 1990s, palladium has witnessed substantial price growth. Investors can invest in palladium by acquiring physical holdings or exploring ETF options.