Buying palladium is one of the investment opportunities that oftentimes gets overlooked when talking about investing in precious metals. Of all of the precious metals available on the market – of which there are four – this is the one that people probably appreciate the least. Buying palladium can actually be a very good investment for several different reasons. This metal has some facts about it that make it highly desirable and, in fact, it is extremely rare. Less palladium goes onto the market every year than gold where the amount taken from the earth is concerned.
What Is It Good For?
Whenever investing in precious metals is being discussed, it’s not hard to point out why the metal is valuable. Gold, for instance, has been a financial metal for so long that it is generally accepted anywhere in the world as a viable means of transferring and storing wealth. This will lead any sensible investor to ask why people are interested in buying palladium. After all, one typically does not hear about banks buying huge stores of palladium as one does about banks buying gold.
More than half of the palladium available is used by industry. In fact, more than half of the palladium available every year is used by one particular industry: the automotive industry. This metal is used to make catalytic converters. These are devices hooked up to the emissions systems of vehicles that helped to convert noxious gases in emissions into harmless substances. As you might guess, this means that the automotive industry is responsible for buying palladium in huge quantities. In fact, the one-time speculation really did affect the price of palladium in a significant regard was because of the automotive industry buying it up due to fears that the prices would spike.
Interestingly, precious metals investment has become very politicized over the years. This isn’t exactly new, as there have always been people who have advocated for gold and silver standards in monetary policy and, between those two groups, there was oftentimes quite a bit of viciousness. Today, people oftentimes claim that they need to buy up gold to protect against the policies of liberal governments. In reality, the spending habits of liberal and conservative governments and their monetary policies don’t differ much, despite the different packaging. Gold is typically recommended as an investment when people are worried about the most common monetary policies among governments, which generally involve manipulating the economy by controlling the money supply and interest rates.
Palladium is interesting because, when governments start stimulating the economy by spending, the palladium is likely to get purchased up by industries that are interested in buying palladium to accommodate their increased manufacturing due to increased investment. In this way, palladium sort of serves as a way to invest in an economy that is showing signs of greater activity. While gold is oftentimes purchased because people are very worried about whether or not keeping their wealth in the form of currency is a good idea, palladium can be purchased and be profitable no matter what type of currency policy happens to be in effect at the moment.
Palladium also has the advantage of having a rather stable trend line across history. Excepting the one instance where the automotive industry engaged in speculation that drove the prices upward, palladium prices have trended upward at a relatively stable rate since it has been a popular manufacturing material. Even after that speculation bubble burst, palladium didn’t plunge in value. It simply went back to prices commensurate with its performance over prior years, showing that this metal does have some attractive stability to it.