Palladium, like many other precious metals, has been enjoying excellent growth in value since the financial crisis as savvy professional investors moved out of stocks and bonds, which were taking a swan dive, and into assets such as gold, silver, platinum and of course, palladium. These metals are used as a hedge against inflation and a weak dollar, especailly in difficult economic times.
At the onset of the recession the value of palladium leapt with double-digit growth, but the summer months of 2009 demonstrated a wavering in the price of many metals - including palladium.
Platinum is bouncing underneath the $1,200 per ounce mark, gold is volatile, silver is hanging and palladium is stuck around $290 per ounce.
More disconcerting for metal speculators is that trading volumes are thin – the market is still and doesn’t seem to know which way to move.
Mixed economic signals are creating the uncertainty – at the start of the year with President Obama elected and the announcement and implementation of the 0 billion stimulus plan, especially to prop up the banking system, some pundits felt the economy was saved. After the hype came the realization the crisis was a lot worse than thought, and maybe, $700 billion was not going to be anywhere near enough –especially when overseas governments were pumping similarly large sums of taxpayer cash into the banking system and still it seemed the financial system still looked to be on the verge of collapse.
The housing sector saw an improvement in August 2009 and September was on target as reported by banks and retailers. Positive signs demonstrating some recovery or at least stabilization, but at the same time the dollar has continued to weaken against foreign currencies signifying a relatively poor performance against overseas markets and especially by those holding America’s debt (China especially).
The fundamental question is whether stock and bond market performance is going to convince investors to return – if they do, those holding precious metals are going to liquidate to get back into those markets in anticipation of enjoying the returns recovery will bring. The metal price will drop like a rock (just look at platinum prices falling from $2,200 to the $1,200 mark in the last quarter of 2008) and those holding palladium, gold, silver or platinum are going to feel very bad indeed that they didn’t take the opportunity to sell when the price was this high.
For those with small holdings of palladium, especially the private individual who may have the metal tied up in family jewelry, now is the time to sell. The risk of a price crash in precious metals, including palladium, outweighs the prospect of a future return. The possible return of market performance could mean the end of the precious metals bull market, which could be the reason the metals market has stalled for the time being.
With so many outlets for convenient selling of old gold, silver, platinum and palladium it makes a great deal of rational economic sense as well as simple commonsense to take the profit that has been created by the recession and turn useless jewelry gathering dust into cold hard cash to pay off debts or to get ready to invest in the stock markets.
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