Gold Alternative #2: Palladium
Palladium doesn’t have gold’s widespread appeal and can be volatile, but it also is useful — especially in electronics, from computers to smartphones to LCD TVs.
The metal was red-hot during the dot-com boom, jumping from $100 per ounce to more than $1,000 per ounce in five years. But the tech bubble burst, and the metal dropped to around $200. The stock has regained quite a bit of ground since then, but has been on a downward trend over the past year.
Since palladium’s usefulness ties to broader economic and tech trends, the eurozone’s woes and lack of U.S. consumer spending have hurt demand. It has dropped nearly $300 from its 2011 highs in the $800s, though at $550, it still is doing significantly better since the financial crisis.
The ETFS Physical Palladium Shares (NYSE:PALL) has been hit hard in the past 52 weeks, off nearly 30% in that time.
Primarily palladium miners are another option. However, the primary U.S. play, North American Palladium (AMEX:PAL), is nearly 60% in the red for the past year. Also, Real America Index member Stillwater Mining (NYSE:SWC) is a leading platinum group metals miner, so it mines both platinum and palladium. This means it could boom in the future, especially considering that worldwide supplies for PGMs are under pressure, though SWC also has had a rough past year, down more than 40%.
Still, despite all palladium’s recently struggles, technology isn’t going anywhere. And as long as there is demand for gadgets, there should be demand for palladium — and that’ll improve when consumers get some more money in their pockets.