Palladium Still Isn’t Pricey Enough – by David Fickling (Bloomberg News – January 10, 2019)

(Bloomberg Opinion) — Platinum’s lesser-known cousin keeps going from strength to strength. Palladium, once considered an unattractive by-product of platinum mining until the rise of catalytic converters in the 1970s, is hitting new records.

Spot metal peaked at an all-time high $1,344.41 a troy ounce Wednesday. Over the past month, it’s been more costly than gold, which hasn’t happened since 2002. From a point a decade ago when an ounce of platinum bought you more than 5 ounces of palladium, it now buys you about 0.6 ounces.

You might think this spike will spark an immediate reversal and slump, as is often the case with commodity prices. That may not happen, though, because prices still aren’t high enough to prompt a supply surge.

Palladium and platinum are part of an intertwined group of rare metals(1) that occur in only three regions on the planet: Southern Africa, Siberia and, in smaller amounts, in the U.S. and Canada. These platinum group metals crop up in the same deposits, so it’s next to impossible to produce platinum without getting some palladium, and vice versa. As we’ve argued before, that means the fortunes of the two are intimately bound together.

That’s important, because the diesel scandals engulfing the global car industry in recent years are reducing industrial demand for platinum, which is used more in diesel catalytic converters. Conventional gasoline-engine cars use more palladium in their exhaust scrubbers – and while that sector isn’t looking too hot right now either, the metals are moving in opposite directions.

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