An adventure into palladium

I bought into palladium yesterday.  I should say I tip-toed in, knowing this precious metal had shot up almost on a straight line.   My journal note said it all:  “Most likely bought into a bubble.”  

Palladium is a place I never thought I’d be.  I didn’t know much about it except that it makes a handsome ring.  I didn’t know that it is used primarily for catalytic converters in automobiles, that Russia is the biggest producer with South Africa also in the chase, that the price has advanced 50 percent this year.  Only 187 to 250 tons are produced each year. 

But I couldn’t resist.   It has beaten the price of gold so bad of late that it’s almost ridiculous.  Since I began to chart gold, silver, platinum and palladium on October 5, palladium by November 8 had advanced more than any of them.  It jumped 22.1 %  compared to gold’s 4.7% and platinum’s 4.2%.  Silver has also soared, up 20.8% in the same time.  Palladium bullion was $579 an ounce a month ago, but at the end of today was $700 after reaching $707 on the 8th. 

As I understand it, American investors have had a crack at palladium only since the first of the year with the ETF called PALL.  It is hardly a blip on the trading screen compared to giants like Exxon Mobil, which has a volume 62 times that of PALL. 

So yesterday I bought a very small stake in PALL at what seemed a premium, $72.60 a share.  PALL actually owns the bullion.  It’s kept in banks in London and Zurich. 

The day went fine for a while.  The price shot up, I went somewhere and came back to the somber news PALL for some reason had dropped $4 per.  I was relieved to see today that it had recovered about half, $2.06 on above average trading, and my hopes are, if not soaring, certainly upward, thinking a few good days are in the winds.

Perhaps my cheerfulness stems from a rewarding experience in gold.  I bought my first gold in 2007, a handful of American Eagle coins, that have doubled in value.  A short time later I invested in the gold ETF, called GLD, and have done almost as well.  

My idea is that palladium, gold and other precious metals are a hedge, not against inflation, but against the weakening dollar. 

Although gold is said to have hit record levels, this morning’s New York Times begs to differ.  The highest price, reporter David Leonhardt writes, was an inflation-adjusted $2,387 an ounce in 1980.  That’s almost 70 percent above today’s price of $1,402.  With that in mind I’m betting there’s an upside still for not only gold, but for my newly-acquired palladium as well.

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