Palladium is the new gold ?

cloud_dog

wombat42 wrote: »

The differentiating factor between palladium and platinum is that palladium is used for gasoline engines and platinum for deisel engines. China is keen on gasoline engines not deisel.

http://www.bloomberg.com/news/2010-11-08/platinum-set-for-its-worst-year-since-2006-as-both-gold-and-palladium-jump.html

"Palladium accounts for 90 to 95 percent of precious metal used in gasoline catalysts and platinum is used for about 75 percent in diesel devices....."

"Palladium is benefitting as state inventories dwindle in Russia, the largest producer, and China favors the metal for catalytic converters in gasoline-powered automobiles."

This may also tie up with emission regulations, presumably gasoline is cleaner than diesel.

Wombat, thanks for the links.

I do understnad the uses of the different metals and agree that demand (for both) is only going to grow. I think the biggest factor behind palladium is the drying up of the Russian supply.

Wrt what is cleaner, you need to define 'cleaner'. Diesel engines 'tend' to produce lower CO2 emissions but produce DPM (carbon soot).

What you have indicated regarding the possible increase in price of palladium is backed up in the articles but there isn't a directive to use palladium.

It is only failry recently (back end of 2009) that the technology has been identified to allow the use of 50% palladium in converters.

All I would say is that they have done this due to the high price of platinum and the low(ish) price of palladium). Palladium also appears to offer an additional cost benefit of only requiring half the physical amoun in a converter compared to platinum.

So, yes demand for palladium will increase. the easy supply (Russia) is (has) dissapeared so all the fundamentals look goo for palladium.

I still believe that if palladium prices were to significantly exceed platinum then you would see a swing back to platinum and a corresponding price realignment.

wombat42_2

sabretoothtigger wrote: »

I have read uranium is the best growth prospect in fuel going forward for china at least

Yes uranium is considered as "hot" as palladium.
http://seekingalpha.com/article/240860-after-gold-and-silver-how-about-yellowcake-for-dessert-part-1

wombat42_2

cloud dog - here http://www.bloomberg.com/news/2010-11-08/platinum-set-for-its-worst-year-since-2006-as-both-gold-and-palladium-jump.html it says:
“Platinum is a more longer-term story before it gets back to the levels of demand we’ve been accustomed to,” said Peter Ryan, a senior consultant at GFMS in London. “It could be another two or three years before we see that. If you’re looking at platinum and palladium right now, we’re probably more positive on palladium.”

Im looking at palladium as a good investment for the next two years but after that some of the action may move back to platinum.

lvader

sabretoothtigger wrote: »

I dont especially like the LMI chart

Lonmin have had significant diffuculties over the last couple on years that go beyond what happened with the credit crunch and crash of commodity prices. They have made significant progress and I see no reason why they can't restore their share price from a few years ago. Well thats why I bought anyway.

cloud_dog

wombat42 wrote: »

cloud dog - here http://www.bloomberg.com/news/2010-11-08/platinum-set-for-its-worst-year-since-2006-as-both-gold-and-palladium-jump.html it says:
“Platinum is a more longer-term story before it gets back to the levels of demand we’ve been accustomed to,” said Peter Ryan, a senior consultant at GFMS in London. “It could be another two or three years before we see that. If you’re looking at platinum and palladium right now, we’re probably more positive on palladium.”

Im looking at palladium as a good investment for the next two years but after that some of the action may move back to platinum.

Yes, from what you've posted and I've read recently I would say thats a fair assessment.

wombat42_2

interesting reader comments here http://seekingalpha.com/article/240860-after-gold-and-silver-how-about-yellowcake-for-dessert-part-1 including

" would like precious metal palladium play much better than uranium play for a few good reasons:

1. Investors who like investing in palladium mining companies (there are only two, SWC and PAL, primary palladium producers) will also hoard physical palladium metal, generate physical investment demand. The same is not true for uramium. No matter how you like uranium, you would NOT want to hoard physical uramium in your basement, because it is radioactive. Thus there is no investor driven physical demand for uramium, making the bullish story less appealing.

2. The is almost no elasticity to expand palladium supply in response to high price. But there is plenty of elasticity in expanding uranium supply. Rich grade uranium mineral reserves are limited, but there is plenty of lower grade uranium mineral reserves which can be developed once the price goes up.

3. Auto makers or other PGM industry users can grow their demand faster than mining companies can develop new mines. But the opposite is true for uranium. Due to the high technology and complicated environmental issue, nuclear power plants are always built much slower than new uranum mines.

4. Uranium has a singular end user: to generate electricity. Demand destruction comes easily when nuclear electricity is no longer cost competitive with electricity from other sources. It is much harder for demand destruction to occur in palladium. How high would palladium price has to go up, before auto makers can no longer afford to buy 4 grams of palladium per car, and stop making autos altogether? It simply will not be high enough to stop auto makers from using the metal.

wombat42_2

But to ask a dumb question. If say there was a ton of palladium available in 2011 but the car industry wants 2 tons for all the new cars, what good does doubling the price of palladium do to help its use in more cars ?

wombat42_2

says here both platinum and palladium used in the manufacture of emission control systems for motor vehicles:
http://www.metalmarkets.org.uk/2010/10/26/palladium-at-ten-year-high-on-proposed-new-emissions-rules-in-us/

sabretoothtigger

what good does doubling the price of palladium do to help its use in more cars ?

Thats a bit of a theoretical question. What good does a high price do, it sorts out who really wants it. It drives investment into alternatives and mining for the product itself.
This is being seen with gold, alot of the mines being opened now cost maybe upto 600 dollars an ounce to mine, they need a spot price around 1000 to average over the next ten years so they know they dont lose money on that investment

no investor driven physical demand for uramium

I count that a positive in its favour. No artifical demand, the price is what it is.
All the same there will be companies who hold larger inventories. mining companies themselves naturally build up piles when maybe the price does not demand they process the raw product immediately and it all switches to high gear when the price is great


They used to 'forge' gold coins with platnium, before its industrial use it was not that highly valued apparently

All these metals vs gold are relying on industrial outlooks. Gold is maybe wealth product related but really its not half as vunerable.
Buy on the lows not the highs I think is best for silver or platinum,etc because there will alot of political upset as this world changes from usa dominated demand.

To answer the OP, no it aint. Gold is the new gold

wombat42_2

one obvious point i overlooked is that Platinum currently costs over double the price of palladum (1679.00 v 733.00) and it would likely be a long time for palladium to ever catch platinum up as while palladium goes up platinum would go up as well but probably not so quickly. So unless platinum becomes significantly cheaper than palladium there is little incentive to switch over even if it were possible.