Noted for its lustrous bright hue, palladium is a rare precious metal available in many of the common forms in which bullion can be purchased today. Automakers also frequently use it, which is part of the reason prices for palladium have been falling lately. Below, the precious metals experts from First National Bullion, the best place to buy gold in Scottsdale, explain what the connection is and offer advice on what to consider if you have plans to invest in palladium.
A Steady Price Fall in 2021
In early 2021, prices for palladium were on the rise. However, this is no longer the case as the year comes to a close. According to MarketWatch, palladium had already posted six price declines in a row toward the later part of 2021. This is the lowest finish as far as price goes for palladium in more than a year, which negates the price increases seen earlier in the year.
The Way Palladium Is Used
Unlike gold and silver, palladium is largely used for certain manufacturing processes. Therefore, it’s more easily affected by what’s going on in the manufacturing world. One of the most common uses for palladium is in making catalytic converters for automobile exhaust systems. The rare metal plays an important role in converting toxic substances to less harmful ones like water and carbon dioxide. Palladium is also used commercially for electronics manufacturing as well as in the dental and jewelry-making industries.
Palladium Price Declines Linked to the Car Industry
More than 80 percent of palladium ultimately ends up being used as part of the automaking process, so it’s a precious metal closely associated with the vehicle manufacturing industry. Unfortunately, the picture isn’t too rosy right now for this industry.
Since late 2020, there has been a shortage of computer chips used for manufacturing things like automobiles, and these shortages are still a major issue. What this has done is reduce the demand for palladium in new cars, since manufacturing has slowed down due to the chip shortage. Automotive industry experts at Edmunds point out there’s a noticeable shortage of new vehicles on lots. In fact, many carmakers have either significantly slowed down production or shut down operations involving vehicle manufacturing altogether due to the chip shortage.
Chances Higher Palladium Prices Will Return
The World Platinum Investment Council suggests there could be a palladium price rebound coming in 2022. The reason is because the council expects automakers to compensate for the shortages and production delays by using more palladium to produce gas-powered vehicles. Some industry experts also believe this precious metal is oversold a bit right now, so prices may gradually increase again before full demand returns.
What It Means for Investors
The dip in palladium prices does have a silver lining of sorts, at least for anyone looking to purchase this precious metal. Now is a good time to see what’s available to determine if you wish to consider making palladium part of your investment portfolio or precious metals collection.
Whether they’re veteran palladium collectors or new investors looking to buy silver bars, Scottsdale residents should reach out to the experts at First National Bullion. We offer a huge selection of palladium, gold, platinum, and silver items. Scottsdale collectors who are looking for the finest-quality coins, bars, and bullion should give us a call at (480) 546-5089 to speak with one of our precious metals experts.
The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.