Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

A Decade In Commodities: Palladium Is The New Gold In Precious Metals Shakeup

By Investing.com (Barani Krishnan/Investing.com)CommoditiesDec 24, 2019 20:41
au.investing.com/analysis/a-decade-in-commodities-palladium-is-the-new-gold-in-precious-metals-shakeup-200431984
A Decade In Commodities: Palladium Is The New Gold In Precious Metals Shakeup
By Investing.com (Barani Krishnan/Investing.com)   |  Dec 24, 2019 20:41
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
XAU/USD
-0.06%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
Gold
-0.12%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
PA
-3.25%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
XPT/USD
-0.87%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
XPD/USD
-3.48%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Stranger things have happened in a decade, so it’s probably not surprising that as we reach another ten-year marker in precious metals, gold is still the number one hedge for inflation and the world’s troubles but it’s palladium that wears the crown — at least price-wise.

In a milestone few might have anticipated so early into the decade, gold got to a record high of nearly $2,000 an ounce in less than two years of its 2010 debut.

It was a phenomenal move, considering where the yellow metal was when it began that journey: $1,096.20.

Gold Futures Monthly Chart
Gold Futures Monthly Chart

Thus, the September 2011 spot price peak of $1,920.80 for an ounce of bullion represented a jump of almost $825 or 75% in just 20 months.

Palladium had an equally riveting story. While the auto-catalyst metal took the full decade to overwrite gold's peak, it rose an average of $140, or 23%, each year — unprecedented for any metal — before reaching the landmark $2,000.50 level a week before Christmas Eve 2019.

Gold and Palladium Have Another Target To Beat: Platinum’s Record

And while palladium and gold outdid each other, neither could match within this decade the all-time high reached by another precious metal even before the 2009-2019 era.

Platinum Futures Monthly Chart
Platinum Futures Monthly Chart


And that metal is platinum, often described as a sister-metal to palladium. Platinum had gotten to as high $2,276 per ounce just before the financial crisis of 2008. It’s a record not many may remember or even know, given that an ounce of platinum fetches just about half of what an ounce of palladium does these days.

And therein is the other story in precious metals this decade: price disparities.

Gold At Least $400 Below All-Time Peak

Gold is at least $400 an ounce less than its record high. But it has also never fallen below $1,000 throughout the decade, demonstrating its standing as an insurance against price pressures and political and financial risks. And gold is finishing 2019 with double-digit gains, with its spot price up 16% on the year and futures nearly 14% higher.

More telling is where the yellow metal is at currently: Back to within striking distance of $1,500. The $1,500 level is a key bullish perch for gold, and is seen as make or break for its continued rally in 2020. That gold can stay within reach of $1,500 — despite the Federal Reserve saying earlier this month it was ending rate cuts for now, reintroduced after a four-year hiatus — is indicative of its rock-solid fundamentals.

Palladium Beats All Commodities in 2019 With Its Returns

Compared with gold, palladium has lost just about $120 from its Dec. 17 record high. For the year, palladium is up 55% on its futures and 48% on its spot price — higher than any commodity. While the relatively-better price performance should put it on a higher standing, palladium is fundamentally nowhere near as superior as gold.

Palladium Futures Monthly Chart
Palladium Futures Monthly Chart


Much of its 2019 rally has been due to a single factor: fear that the tight mine supply situation out of South Africa and Russia will worsen, impacting production of gasoline cars that rely on palladium to purify their emissions. But for palladium to reach even loftier heights, the auto industry will also have to continue expanding without much disruption in the new decade.

At the moment, there’s simply no guarantee of this, given the economic challenges brought by each decade. There’s also the question of automotive evolution, with electric cars likely to have greater market share in the coming years along with the growth in environmental concerns that could put further curbs on fossil fuel emissions.

So, in the final mix, the question is where could each of the leading precious metals be trading in the near future?

Gold Could Seek $1,800; Palladium May Hit New High Or Consolidate

Gold could attempt $1,700-$1,800 in 2020, underpinned by the likelihood of continued trade disputes and other tensions brought by U.S. President Donald Trump in the year where he’ll be seeking reelection. Even with the potential for a partial deal with China, few investors are willing to bet that all will be safe with Trump. Case in point: gold’s resilience at near $1,500 this week despite stocks on Wall Street hitting record highs on the China deal optimism.

Gold could also break out in the coming year if the Federal Reserve goes back to cutting rates again to preserve U.S. growth. The American economy is already at a record 11-year expansion streak, and some stimulus may be necessary to keep it chugging along.

Palladium could extend to new record highs above $2,000 if there’s another supply squeeze like this year. But if output at South African and Russian mines steadies in 2020, the auto-catalyst metal could fall to as low as $1,500.

A Decade In Commodities: Palladium Is The New Gold In Precious Metals Shakeup
 

Related Articles

Naeem Aslam
Gold to Retreat, Oil Eyes OPEC Meet By Naeem Aslam - Jan 27, 2023

Gold Gold prices are on track to post losses this week, mainly for two reasons. Firstly, this week, we have seen strong US economic data, which indicates that the US economy is...

A Decade In Commodities: Palladium Is The New Gold In Precious Metals Shakeup

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email