Palladium

Compared to gold and silver, the palladium market is a lesser-known option for precious metals investors. But in recent years growing demand and a supply deficit have led investors to seek out ways to invest in palladium.

While palladium is used in jewelry, most of the metal is consumed by industrial markets — catalytic converters, which help remove the pollution from combustion engines, use more than 70 percent of global palladium. Electronic and chemical applications are also key in the palladium industry.

On the supply side, the world’s largest palladium producer is Russia, followed by South Africa. South Africa has been the site of many mine disruptions in the last several years, largely due to strikes and a lack of long-term investment in production facilities. Despite the risk that may be associated with this particular emerging market, development in the palladium sector still exists within the region.

With that in mind, here’s an overview of a few different ways that investors can gain exposure.

1. Palladium investments: ETFs

Palladium-backed exchange-traded funds (ETFs) track palladium like an index fund, but trade like stocks on an exchange. Examples of palladium ETFs include the Sprott Physical Platinum and Palladium Trust (ARCA:SPPP) and the Aberdeen Standard Physical Palladium Shares (ARCA:PALL).

The Sprott Physical Platinum and Palladium Trust was created to invest and hold substantially all of its assets in physical palladium and platinum bullion. The trust currently holds 53,002 ounces of palladium and 24,090 ounces of platinum. The  portfolio is held in custody at a federal crown corporation of the Canadian government.

The Aberdeen Standard Physical Palladium Shares is designed to track the performance of the palladium price, less expenses. It holds over 130,000 ounces of palladium in London at a secured vault belonging to JPMorgan Chase & Co. (NYSE:JPM).

2. Palladium investments: Bullion

It’s also possible for investors to hold palladium bullion directly. In fact, financial investors may buy palladium bullion coins or collectible palladium coins for portfolio growth. This approach may suit investors looking to invest only small amounts of money in the metal.

Palladium bars and wafers are another option, but these are not as readily available.

3. Palladium investments: Palladium stocks

Finally, investors may gain exposure to palladium by investing in a palladium-focused business. This method of palladium investing can be tricky — most of the world’s palladium is produced in countries with primary platinum mines. As a result, it’s difficult to gain exposure purely to palladium.

Still, there are at least two primary palladium miners in North America: Sibanye-Stillwater (JSE:SGL) and North American Palladium (TSX:PDL,OTC Pink:PALDF). The following TSXV- and TSX-listed companies also offer exposure to palladium, in addition to platinum and other metals:

• Ivanhoe Mines (TSX:IVN,OTCQX:IVPAF), which is developing the massive Platreef project in South Africa.
• New Age Metals (TSXV:NAM,OTCQB:NMTLF), a green metals company developing its River Valley property.
• Nickel Creek Platinum (TSX:NCP,OTCQB:NCPCF), which holds the Nickel Shäw project in Canada’s Yukon.
• Sama Resources (TSXV:SME,OTC Pink:SAMMF), whose flagship Samapleu property is located in the Ivory Coast.
• Wallbridge Mining (TSX:WM), which is currently exploring for base and platinum-group metals at its Sudbury projects in Ontario.