What was the better investment in 2019? The S&P 500 or one of the precious metals?
If you guessed palladium, you’d be right.
Palladium has been the star performing metal commodity this year, generating a whopping 52 percent gain YTD. It outperformed the S&P 500, which itself was a crowd pleaser that generated a 27% percent in 2019, by 25 percent. Most people don’t even know what it’s used for or how it became so precious.
Palladium: The Unsung Metal
The story of palladium’s discovery is such an interesting one in its own right that you should go check out one of the best total descriptions of palladium here.
Palladium is preferred over platinum as the catalytic converter ingredient of choice for gasoline engines. Demand has soared in the earlier part of this decade since Volkswagen was discovered to be rigging its diesel emissions numbers.The price tapped $2,000 this week twice, and looks poised to go higher.
Isn’t it funny that most of us are focused on gold while palladium comes roaring up from the $800-ish price level it held since the metal really took off in 2018. A rather perfect case study of what happens when short supply converges with increasing demand in a free and unfettered market.
How to Bet on Palladium
The intriguing aspect of palladium is its superb ability to remain of moderate interest even while its price is accelerating. Thus, the various derivative ways to play palladium without just buying the metal itself (which you can do) do not yet have much of a premium built into them.
But know that you’re so not early to this party.One thousand 200 percent of that price jump came in the last 26 months, so this is yet again one of those stories hate but love where you can’t believe you didn’t hear about it. But don’t beat yourself up; it’s a noisy world these days.
There is a palladium ETF here, and of course the Sprott Platinum and Palladium Trust , but if you want maximum torque for your risk dollar, a well-timed and well-priced wager on a junior palladium explorer could be your preference.
Impala Platinum Ltd S/Adr (IMPUY:US) became one of the largest and best-performing Platinum Group Metals producer with the acquisition of North American Palladium – a deal that closed earlier this December 2019.
According to the company’s web site:
The Marathon Deposit is the largest undeveloped Platinum Group Metal (“PGM”) Mineral Resource in North America. The Company is actively exploring extensions to the Marathon Deposit as well as the Geordie and Sally satellite deposits and the Boyer Zone. The Marathon Property covers a land package of approximately 22,000 hectares or 220 square kilometres. Gen Mining’s Marathon Property is located less than 10 kilometres from the mining town of Marathon, Ont., and is very close to the Trans-Canada Highway as well as the CPR main rail line. The new 230-kilovolt East-West Tie power line from Wawa to Thunder Bay, which is expected to begin construction shortly, will pass through part of the Marathon Property.
The recent P&E Mining Consultants Inc. Technical Report estimated that the Marathon Deposit contains a Measured and Indicated Mineral Resource Estimate of 7.13 million ounces palladium equivalent (PdEq), within a 179-million-tonne constraining pit at 1.24 grams per tonne PdEq, calculated at a $13/tonne-net-smelter-royalty (NSR) cut-off (includes an estimated 3.24 million ounces (oz) palladium (Pd), 1.06 million oz platinum (Pt) and 796 million pounds copper (Cu)).
And here’s an interview I did with the CEO of the company earlier this year:
The share price of Generation has yet to be correlated in any way to the steep price incline of palladium. This is a glaring value opportunity, in my opinion, and already has a built-in takeover suitor in the form Sibanye Stillwater from whom it acquired its 51-percent interest in the Marathon Property from on July 10, 2019.
I don’t own any shares any shares at this point, but don’t be surprised if I do in the near future.
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