Is it time to buy palladium ? Strong demand from automakers and a drop in supply indicates the biggest shortage in 32 years is on the horizon, according to a Bloomberg survey.
Palladium, used in vehicles' catalytic converters, has been the worst performing in the precious metals group this year and is forecast to rise 24 per cent by the end of the year, according to the survey.
The price of the metal rose more than fourfold from 2005 through the end of last year, and has fallen 3.6 percent to $772.75 (U.S.) an ounce this year, lagging behind gold, silver and platinum.
It is also underperforming the 12 percent advance in the Standard & Poor's GSCI Index of 24 commodities, the 4.8 percent gain in the MSCI All-Country World Index of equities and the 2.5 percent return on Treasuries shown by a Bank of America Merrill Lynch index, Bloomberg points out. The decline accelerated in March after Japan's earthquake forced automakers to shut plants.
But now, Standard Bank Plc expects a 1.6 million-ounce deficit, and the median price forecast of 24 analysts and traders surveyed by Bloomberg is $955 -- a level last seen in February, 2001.
How do you play it? Here are some ideas:
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The case for palladium -
How to invest in palladium
Sonali Verma