Cart (0)
VIDEODemand From Automakers Likely to Boost Palladium ETF
Production challenges in South Africa, including deadly accidents and other safety issues surrounding the metals and mining industry, will also help investors.
 |
|
Increased demand from global automakers and supply issues are expected to pose an opportunity in palladium and its exchange-traded funds (ETFs).
Palladium, similar to its much more expensive sister platinum, is used in vehicle exhaust catalysts to control emissions in automobiles. Demand for palladium is expected to be supported from a recovery in automotive sales as well as the passage of stricter emissions and regulations on automobiles in the United States, Europe, and Asia. In Europe, the region is moving to fully implement regulation on emissions from diesel engines and in Asia sales of automobiles are expected to remain healthy.
On the supply front, production issues in the world’s second-largest producer of palladium, South Africa, have started to emerge. Recently, production challenges in South Africa have been caused by deadly accidents and other safety issues that surround the metals and mining industry. As for the future of South Africa’s palladium production, inadequate investment in infrastructure, frequent labor disputes in the metals and mining industry, and the possibility of the passage of unfavorable changes in mining legislation are reasons that supply isn't expected to grow. To further add to the supply woes that palladium is witnessing, stockpiles of the metal in Russia, the world’s largest producer of the metal, have depleted.
In a nutshell, supply for palladium isn't expected to keep up with demand, resulting in positive price support for the metal. An easy way to gain access to the metal is through the ETFS Physical Palladium Shares ETF (PALL), which seeks to reflect the performance of the price of palladium bullion.
For more on ETFs take a FREE 14 day trial to the Grail ETF & Equity Investor newsletter. Receive specific trades and strategies across many sectors. Learn more.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
