Gold Alternative #2: Palladium
As with most rare and precious metals, palladium comes in coins and bars. But the metal doesn’t quite have the glitter of gold, platinum and silver, and, despite its value, it’s an unlikely currency if the dollar disappears. So those of you looking for a hard asset to trade for food after the financial apocalypse, don’t bank on palladium.
Still, palladium’s appeal as a commodity investment is obvious, as the element is found in electronics from computers to smartphones to LCD televisions. If and when electronics sales heat up once more, following could be low supply and high demand – a hallmark of any good commodity play. Until then, as long as the flight toward hard assets continues, palladium will benefit.
Palladium was “discovered” during the dot-com boom, racing up from around $100 per ounce to more than $1,000 per ounce in five years. It then flopped to around $200 as the tech bubble burst. Yet palladium appears to be having a rebirth. The metal opened 2010 at around $420 per ounce and ended the year at almost $800, nearly doubling. Like platinum, palladium has been essentially flat in 2011 after a brief spike in February, but the red-hot run last year means the metal could be poised for more gains.
How do you play palladium? ETF Securities offers a pure palladium fund akin to its gold, silver and platinum offerings – the ETFS Physical Palladium Shares (NYSE:PALL). There also are a handful of primarily palladium miners, including North American Palladium Ltd. (AMEX:PAL), which is up 75% in the past 12 months. However, there is a much greater variety of diversified miners for stock investors. One such is Stillwater Mining Company (NYSE:SWC), which has significant palladium holdings alongside a platinum mining business. SWC stock is up 36% or so in the past year, significantly outperforming the market, though the stock has dropped dramatically during the past week or two in part because of acquisition news.