Updated on July 23, 2024
August 8, 2022
Do you know how to trade palladium? Isn’t it? Our article can help you with that. The basis of success in investing is to be in the picture. Therefore, we will first tell you everything important about palladium, including its history and use. And then we will explain to you the ways palladium can be traded. We also do not hide what factors influence the development of the price of palladium. And we will also show the current online chart. Ok lets go!
Palladium – properties and uses
We classify palladium as a metal commodity. It is a noble metal of gray-white color. Noble metals stand out compared to non-noble ones with low reactivity, high conductivity and resistance to corrosion. Palladium, like gold, silver or platinum, is an expensive metal. This means that it is a rare metal, the supply of which is slowly but surely getting thinner. This is also why palladium has become one of the commodities to trade.
And where are the properties typical of palladium used? Mainly in the chemical industry. It is often used as a catalyst in this industry. Both in organic syntheses and in exhaust gas catalysts. Like platinum, palladium can also absorb unwanted substances in exhaust gases. For example, unburned hydrocarbons and carbon monoxide. Therein lies the use of palladium in the automotive industry.
Palladium as a precious metal
In addition to the chemical industry, it is also used in other industries. We mustn’t forget that palladium is a precious metal. And it is typical for them that they are used for the production of jewelry. However, compared to gold or silver, the production of palladium jewelry is quite limited. Although jewelry made of palladium has advantages such as colorfastness, clarity and hypoallergenicity. However, palladium is used in the industry more as an alloy than as a majority metal. Specifically, it serves as an ingredient for the production of white gold, where it replaces nickel.
Palladium is also used in precious metal dental alloys. Here, as with alloys for jewelry production, it replaces nickel. Unlike palladium, it can be toxic. And therefore it is undesirable for it to occur in alloys for dental restorations. In this industrial area, one of the typical alloys is a substance containing silver, gold and palladium.
And not to forget another function of precious metals, let’s look at palladium as a currency. Palladium is not very popular for coinage. This is primarily due to its color, which is closer to gray. So if we are talking about palladium coins, then they will have an investment purpose.
Palladian history
The history of palladium is not as long and rich as, for example, gold and silver. We date the discovery of this precious metal to 1803. It happened in South America. An English physicist and chemist named William Hyde Wollaston discovered it along with rhodium when he separated both of these elements from platinum ore. Palladium was subsequently named after an asteroid that had been discovered the year before. So in 1802.
How to trade palladium
Now we know what properties palladium has and in which industries it is used. But let’s now look at how palladium can be traded. And what to do to make money on investments in this rare and expensive metal.
Physical palladium
The first option is to invest in physical palladium. Most traders invest in palladium by purchasing an investment coin minted from palladium. It can have a different value. Alternatively, investment palladium bars are also available. However, they are less common than gold, silver or platinum bars. Until recently, they were also available from the Czech Mint .
Another way to trade palladium is to trade on a commodity exchange. On the commodity exchange, palladium is exchanged between its producers and those who need to physically own more palladium. And to make something out of it. Palladium is traded here in ounces. And its price is traditionally given in US dollars.
On commodity exchanges, palladium is usually traded through futures contracts. The point is that two parties agree that a certain volume of palladium will be exchanged at a predetermined price on a certain date. Futures contracts are beneficial for both parties. This ensures future sales at a price that suits both parties.
Palladium CFD Trading
But if you are a small investor who does not necessarily need to own physical palladium, then we have a solution for you. And that’s palladium CFD trading . With this type of trading, you can profit from both the rise and fall of the palladium price level. And you are not buying or selling any real palladium. palladium only serves here as an underlying asset.
When trading contracts for difference, you only speculate on the development of the palladium price level. And thus you conclude a contract with your broker. In it, both parties undertake to pay the difference between the purchase and sale price of palladium. Whether you will pay extra to the broker, or the broker will pay you, will depend on whether your speculation on the price development was correct.
So it works like this. You examine the current market situation and find that the price of palladium will rise in the near future. And so you decide to speculate on the increasing development of the price level of this metal. So you enter a buy position and stay in it for as long as you think it is profitable. The price will evolve in some way. Let it develop as you envisioned. In that case, the broker will pay you the resulting difference. And you will earn from the trade. However, if the price moves in the other direction, you will pay the broker. And thus you incur a loss.
How to begin
How to start trading palladium? It’s nothing difficult. There are quite a few online brokers on the web that allow you to trade palladium CFDs. You just have to choose between them. But if we can advise you, take care of your choice. You will also find fraudulent brokers among them. And you wouldn’t have to see your finances anymore. Therefore, do not skimp on gathering information and reading reviews of other traders.
When you choose a suitable broker whose trading conditions suit you best, you still haven’t won. In order to become a successful trader, you need to constantly monitor the current market situation. Speculation on the price development of palladium should not be a random tip. On the contrary, it should be based on some rational basis.
And the last thing that can make it easier for you to enter the world of trading not only palladium is a demo account. Demo accounts are routinely offered by the vast majority of brokers today. It is a practice account that allows you to familiarize yourself with the broker’s trading platform before you even start trading. At the same time, you can test your success in market research and subsequent trading on this practice account.
Beware of risks
Be aware, however, that trading with palladium can also bring certain risks. The biggest one lies primarily in financial leverage. You trade with it if you trade CFDs. Leverage causes your resulting profit or loss to multiply. How high a number? It depends on the amount of financial leverage. So when you trade CFDs, be careful with how much leverage you are trading.
What affects the price of palladium
Let’s now imagine the factors that influence the development of the price of this commodity. In this case, of course, we have to take into account the mismatch between demand and supply. Palladium is a very rare metal and is still in demand by the automotive industry. But in a higher quantity than is available. And while the demand for it is gradually increasing, the stocks of this commodity are slowly getting thinner. And precisely as a result, the price of this metal is gradually increasing.
Other factors that could affect the price of palladium are the future state of the automotive industry. And also the political and economic situation in the countries that produce the metal. For example, sanctions or export restrictions could significantly raise the price of the metal. Mainly from Russia and the Republic of South Africa. The price of palladium could also be affected by its new deposits. This would mean higher production and the price of the metal could thus fall.
Palladium – current online chart
See how the price of palladium has evolved over time.
Development of interest in the commodity
It is still necessary to say that if we talk about palladium as an expensive and rare metal, this applies here more than for example gold. Especially in the area of its production. The mining of this commodity is tied to only a few global deposits.
In fact, 80% of the total palladium mining comes from two countries. And from Russia and the Republic of South Africa. The volume of their total annual production is approximately 159 tons. Other countries that mine this metal are Canada, USA and Zimbabwe.
At the same time, the automotive industry really needs and demands this metal as an exhaust gas catalyst. And despite the gradual transition to electric cars, the use of palladium in the automotive industry is not decreasing. On the contrary. Electric cars also need this metal.
Therefore, the production of palladium is not enough to satisfy the demand for this rare metal in the long term. This is the reason why its price rises in the long term. And the outlook for the future is that its price will continue to rise. So if we talk about investing in this metal, it can be a good longer term investment for the future.
Palladium – Summary
So now you know that palladium is an expensive and very rare metal. More than 80% of its total global production is accounted for by two countries, namely Russia and the Republic of South Africa. And although it is an expensive metal, it is used in the automotive industry rather than in jewelry, where demand exceeds supply. At the same time, the deposits of this metal are very limited. This is the reason why it is assumed that the price of this metal commodity will continue to grow in the future. And that’s why investing in this commodity could pay off for you.
