Investors interested in palladium investments have a number of different options to consider. Here’s a rundown of three of them.
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, account for more than 70 percent of palladium use. Palladium is also used in electronic and chemical applications.
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.
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 ETFS 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 platinum and palladium bullion. The trust currently holds 69,028 ounces of palladium and 31,032 ounces of platinum. The metals are held in custody at a federal crown corporation of the Canadian government.
The ETFS Physical Palladium Shares is designed to track the performance of the palladium price, less expenses. It holds 137,636 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, investors may buy palladium bullion coins or collectible palladium coins. 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 palladium-focused companies. This method of palladium investing can be tricky — most of the world’s palladium is produced at primary platinum mines. As a result, it’s difficult to gain exposure purely to palladium in this manner.
Still, there are at least two primary palladium miners in North America: Sibanye-Stillwater (JSE:SGL) and North American Palladium (TSX:PDL). The following companies also offer exposure to palladium, in addition to platinum and other metals:
- Ivanhoe Mines (TSX:IVN) — which is developing the massive Platreef project in South Africa.
- New Age Metals (TSXV:NAM) — a green metals company developing its River Valley property.
- Nickel Creek Platinum (TSX:NCP) — which holds the Nickel Shäw project in Canada’s Yukon.
- Sama Resources (TSXV:SME) — 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.
This is an updated version of an article first published by the Investing News Network in 2015.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: New Age Metals and Wallbridge Mining are clients of the Investing News Network. This article is not paid-for content.