Another Notch In Palladium's Belt
Palladium has not been immune to the recent tumble in precious metals. One could even argue that a nasty $15 tumble in the ETFS Physical Palladium Shares (NYSE: PALL) from mid-February to early March may have been a sign other metals were set to weaken.
It should be acknowledged that PALL still resides well off its February peak, but looking ahead, the prospects for the lone U.S.-listed ETF backed by physical palladium appear strong.
Regarding the bull case for palladium prices and PALL, everyone and his sister always talks about auto demand. To be sure that is an important catalyst, but there is something else to consider. Russia, the world's largest palladium producer, could be running low on the metal.
How much palladium Russia actually has is always up for debate because the total is a state secret and public estimates are probably as reliable as a Saudi oil reserves estimate, but Norilsk Nickel, the biggest palladium producer in the world, said earlier this week Russia will halt palladium sales from its national stocks next year, according to IB Times.
Add to that, Norlisk Nickel said palladium demand is set to outpace supply through 2015. A Reuters survey indicates palladium could trade up to $824 an ounce this year, well above the $731 an ounce it is trading at as of this writing.
PALL does an excellent job of tracking palladium prices on a one-tenth basis. When the metal was at its one-year high of $855 an ounce in February, that's when the ETF was sitting around $85. Translation: A move to $824 should equal a gain of better than 10% from where the ETF currently trades. Not too shabby at all.
