For the last few years, automakers have been using palladium instead of platinum in their exhaust systems as a catalytic converter because of the cheaper price point. However, the price of palladium has dramatically changed in the last few months.
Palladium has skyrocketed from $980.00 to over $1,500.00 in a 6-month span. This dramatic increase is due to two major events.
First is the release of the 2018 Proof Palladium Eagle from the U.S. Mint. With a mintage of 15,000 coins that sold out, the hype, speculation, and demand for these coins have contributed to the rise in the price of palladium. In addition, the 2019 reverse proof palladium eagle is set to release this fall which will also contribute to speculation.
Next, there was a controversy with ETF exchanges. Typically, people trade precious metals on these exchanges as a contract, where no precious metals are actually delivered. However, as people have requested deliveries of large amounts of these metals, the exchange has been unable to produce said amount. This has brought to light that these exchanges have been trading well over what they actually have in palladium. As a result, the general public has realized that perhaps there isn't as much palladium available than was originally believed, thus leading to a speculated decrease in supply and an increase in price.
Because of these events, palladium has soared. On the other hand, platinum has been stagnant over the last 6 months and has trended downward over the last 5 years. However, as speculation increases that automakers might switch back to platinum, now might be an opportune time to buy.
Originally posted on: 03/11/2019