By Palladium is a lesser-known option for precious metals investors compared to gold and silver. Recently, however, growing demand and a supply deficit have driven interest in ways to invest in palladium.
While palladium is used in jewelry, most of the metal is consumed by industrial markets — catalytic converters, which help remove the pollution from combustion engines, use more than 70 percent of global palladium production. Electronic and chemical applications are also key in the palladium industry.
On the supply side, the world’s largest palladium-producing countries are Russia and South Africa. There have been many mine disruptions in South Africa in recent years, largely due to strikes and a lack of long-term investment in production facilities, but despite those risks miners are still moving forward with palladium development in the region.
Russia is the source of 42 percent of global mined palladium supply. The country’s war in Ukraine has placed it at the other end of the sanctions sword as the world’s leaders try to force President Vladimir Putin to end the bloodshed. In April 2022, bourses in London and Chicago suspended two state-owned Russian refiners from their goods-delivery and sponge-accreditation lists.
With that in mind, here’s an overview of different ways that market participants can invest in palladium.
1. Ways to invest in palladium: ETFs
Palladium-backed exchange-traded funds (ETFs) track the precious metal like an index fund, but trade like stocks on an exchange. Examples of palladium ETFs include the Sprott Physical Platinum and Palladium Trust (ARCA:SPPP) and the Aberdeen Standard Physical Palladium Shares (ARCA:PALL).
The Sprott Physical Platinum and Palladium Trust ETF was created to invest and hold substantially all of its assets in physical palladium and platinum bullion. It currently holds 43,000 ounces of palladium and over 62,000 ounces of platinum. The portfolio is held in custody at a federal crown corporation of the Canadian government.
For its part, the Aberdeen Standard Physical Palladium Shares is designed to track the performance of the palladium price, less expenses. It holds over 184,000 ounces of palladium in London at a secured vault belonging to JPMorgan Chase (NYSE:JPM).
2. Ways to invest in palladium: Bullion
Another way of investing in palladium is by holding physical assets directly, such as palladium bullion. In fact, financial investors may buy palladium bullion bars, palladium bullion coins or collectible palladium coins for portfolio growth. This approach may suit multiple kinds of investors, from those looking to invest small amounts of money in the metal to those with larger quantities of cash.
Palladium bars and wafers are another option, but these are not as readily available.
3. Ways to invest in palladium: Stocks
Finally, investors may gain exposure to palladium by investing in a palladium-focused business.
This method of palladium investing can be tricky — most of the world’s palladium is produced in countries with primary platinum mines, which means that it’s difficult to gain exposure purely to palladium.
Still, there are at least two primary palladium miners in North America: Sibanye-Stillwater (NYSE:SBSW,JSE:SSW) and Impala Platinum Holdings (OTCQX:IMPUF,JSE:IMP).
The following TSXV- and TSX-listed companies are examples of smaller-scale stocks that offer investors exposure to palladium, in addition to platinum and other metals:
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.