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Palladium ETFs Lead Metals on Car Sales, Supply Concerns


Palladium exchange traded funds are outshining other precious metals as consumers, who have held kept their cars for the longest period in half a century, are feeling confident enough to buy new vehicles. Severe supply deficits are also helping to support prices.

The ETFS Physical Palladium Shares (PALL) gained 9.2% over the past month and it is up 21.3% over the past year. In comparison, the SPDR Gold Shares (GLD) is down 4.3% in the past month and declined 13.2% over the past year. [Institutional Investors Take an Interest in Palladium ETF]

May auto sales are projected to increase 6% to 8%, with annual sales set to rebound back above 15 million vehicles, after a disappointing April result, reports Ben Klayman for Reuters.

“This is the time of year when the automotive industry holds its collective breath as the recent past has dealt with a spring slowdown in demand; however, the current pace suggests full steam ahead for the second half of 2013,” LMC senior vice president Jeff Schuster said in a statement. “Economic and market headwinds have been minimized, while demand continues to build momentum.”

About 90% of palladium produced in 2012 went into catalytic converters for gasoline-burning automobiles, reports Tatyana Shumsky for Barron’s.

“When we saw the turnaround in auto sales, that was the first sign that [palladium] price growth would continue,” Dave Meger, director of metals trading at futures brokerage Vision Financial Markets, said in the Barron’s article.

On the supply side, strike and labor disputes threaten production in South Africa, which accounted for 35% of palladium mined in 2012. In Russia, home to the world’s largest palladium producer, reserves are depleting and mines are coming out with lower-quality ores. Moreover, Russia’s stockpiles are expected to fall over 50%. [Palladium ETF Boosted by Continued Deficit Fears]

ETFS Physical Palladium Shares

For more information on palladium, visit our palladium category.

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own GLD.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.