#Palladium- The Star of the Metals Markets $PALL

The star of the week was Palladium. The grey-white metal touched the highest price since March 2015 (attachment 1).  The weekly chart shows the medium term base palladium has formed (attachment 2). The Point&Figure chart reveals the breakout of the chart formation (attachment 3).

 

The 10-year palladium chart shows that the metals is just US$ 100 below the peak of 2014 and therefore has outperformed, gold , silver and platinum (attachment 4). The palladium price is now trading around the highs of 2015, which could be a resistance point.

 

A Reuters article (March 16) stated that a fund created by Norilsk Nickel had purchsed palladium from Russia's central bank reserves to help meet demand from its customers. The central bank holds reserves of palladium, which Norilsk will use to fill orders and not for stockpiling.

 

The Russian central bank has been selling palladium

for years into the market (from stockpile) but lately it seemed that selling had diminshed. It all looks Russia has found a way to better control the palladium market and therefore the palladium price.

 

Also the big fairy tale by politicians and car dealers

that diesel engines are less polluting has come to

an end. German Chancellor Angela Merkel said once

if you buy a diesel car then you buy a car which is more environmental friendly. She said this during an

electoral campaign. Diesel engines in relation to gasoline engines are more efficient, they need less fuel and therefore emit les CO2. However, they emit a lot of nitrogen oxides, which the World Health Organization (WHO) classifies as harmful. In addition nitrogen oxides decompose in a chemical process into fine particulates which could harm the lungs.

 

Platinum is used to reduce emissions in diesel-powered engines whereas palladium is used in gasoline-powered engines. A strong Chinese market tends to favor palladium, which are used by catalytic converters in gasoline-powered cars, which make up the biggest market share in China and the U.S. Attachment 5 shows the applications for palladium and attachment 6 the palladium producers by country.

 

In an article of TD Securities  (Toronto-Dominon Bank) last December, TD looks for the palladium market supply deficit to double from 600,000 ounces in 2016 to 1.2 Mio. ounces in 2017.

 

The palladium market is very small with only just over 6 Mio. ounces produced per year (attachment 7).

 

The best vehicle to trade palladium is the ETF Physical Palladium Shares (PALL) US$ 77.49 (attachment 8). The palladium price is very volatile, which doesn't suit all investors.