Most metals, whether precious or base, tend to trade as a herd. If copper is rising, zinc probably is too. But palladium is very much its own animal. Never mind the herd, it tends to strike out and do its own thing – not always, but often.
In the late 1990s, for example, when most metals were at the tail end of a bear market that had gone on for 20 years – one of the worst in history – palladium began a four-year run that saw it rise by 1,000%. It went from $100 per ounce (oz) all the way to $1,100/oz by 2001. The likes of gold and copper were declining to 20-year lows over the same period.
The reason was that vehicle manufacturers switched from platinum to palladium for their catalytic converters. Changes in fuel meant the advantage of platinum was negligible. Palladium was more efficient at reducing hydrocarbon emissions and much cheaper. But then the switch met with disruptions to exports from Russia, the world’s largest producer. It became known as “unobtainium” and the price rocketed.
But then, between 2001 and 2004, when the bull markets in gold and copper were just getting going, palladium lost 85%. The market is thinly traded, while stocks are minimal, meaning it can be prone to big price swings. When gold and copper had their day in the sun in the run-up to 2008 and 2011, palladium’s performance was lacklustre. It rose, but not by nearly as much, and the highs were