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Palladium Power: Precious Metal ETF is Still Hot

Palladium Power: Precious Metal ETF is Still Hot

November 13, 2017


The ETFS Physical Palladium Shares (NYSEArca: PALL) fell 1.6% last week, but the lone US-listed exchange traded fund dedicated to holdings of physical palladium remains higher by more than 44% year-to-date, making it one of 2017’s best-performing commodities exchange traded products.


Among the largest contributors of industrial demand, robust global auto sales fueled greater demand for the precious metals as part of catalytic converters to diminish harmful gas emissions. About 40% and 75% of annual demand for platinum and palladium, respectively, apply to autocatalysts in combustion engines.Some naysayers point to the growth of electric cars as a big risk to autocatalyst demand. Gold, though, argued that slowing sales growth, infrastructure build out and battery shortfall risks in the electric car industry  will drag on this segment and leave more room for autocatalyst demand. However, some market observers believe palladium demand will remain robust.


“A plethora of factors has been conducive to the latest palladium surge – rising gasoline sales in Europe, robust car sales in the predominantly gasoline market of China, hurricane-damaged households buying new cars in the United States, all this against the background of tight palladium production supplies. But will the current price level stay or is a massive bust lurking behind the corner? Evidence suggests the former,” according to


Other critics also contend that the popularity of ride sharing platforms indicate a peak in auto demand, which may reflect the weak U.S. auto sales among the Millennial demographic favoring a sharing based economy. This trend may actually spur higher total miles driven and reduce average vehicle lives. The shifting demand to higher total miles driven could potentially reshape the cyclical nature of the industry.


“The main reason behind palladium’s overtaking platinum lies within the development course the global automotive industry has taken,” according to “Whilst palladium is used primarily in gasoline cars, palladium’s sister metal platinum is generally applied in diesel cars – following Volkswagen’s diesel emission scandal and shattered confidence in Diesel cars (most notably in Europe where the market share of once-prevailing diesel cars has fallen below 45 percent) the two metals have been moving into opposite directions.”


Palladium demand is growing on an international scale, but, and this is important for PALL, supply is again having problems meeting that demand. The global palladium market has been in a supply deficit for six consecutive years.