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The awareness about palladium has increased significantly over the past few years, and it is attracting the interest of investors. The metal, currently trading at $2,057.39 per oz., was mainly bought by the automotive and electronic industry. The demand for palladium was 8.5 million oz. in 2020 and is expected to reach 9.2 million oz. in 2021.
The supply just about meets the demand at present, and as manufacturing activity picks up pace, there may be even a short supply of the metal. Therefore, now is the right time to invest in palladium for your future. As demand increases, prices will shoot up. If you are still wondering if you should invest in metal, here are the top five reasons to help you make a decision.
Auto Industry Turning Green
Vehicle manufacturers prefer palladium in their vehicle exhausts as it emits a limited amount of carbon dioxide in the environment. This allows them to meet their sustainability and eco-friendly goals. A study found out that people preferred buying products from companies that used sustainable practices and were ready to pay about 5% more than the usual price. Therefore, more and more auto manufacturers are expected to switch to palladium, which will result in a continuous increase in demand.
Prices of any commodity are based on simple laws of economics, according to which anything with high demand and limited supply will result in an increase in its prices automatically. This applies to palladium too. The current supply just about meets the demand. In 2020, palladium from scrap and mining operations totalled 8.9 million oz. and was expected to reach 9.2 million oz. in the next year. The demand in 2021 is also likely to be 9.2 million oz. and increase further over the years. This surge in demand will create a deficit and hence increase prices. If you plan to invest in palladium for your future, now is the time to do so when prices are still low.
Most of the world’s palladium comes from Russia and South Africa. These countries rank pretty low in the economic freedom list due to various geopolitical reasons. If for these reasons, even one country was to be cut off from world trade, there would be a severe global shortage of metal, sky-rocketing prices. Even if not cut off, the countries could implement trade restrictions on the metal, causing prices to increase. Therefore, investing in it now is recommended.
Hedge Against Stock Markets
Investing in precious metals is a popular way to hedge against the stock market. You can diversify your portfolio and ensure that adverse economic events do not impact your overall portfolio as much as investing in a single commodity.
Easy To Buy
Available in coins, rounds, and bars, you can buy palladium in any of these forms. You can also invest in ETFs with palladium as the underlying asset if you want to invest virtually. Further investing in palladium mining companies is another option to get exposure in the metal.
With such compelling reasons, it is a wise idea to invest in palladium for your future, and it will give you a retirement corpus that you can live on comfortably. The return will surpass returns on any other asset class.