Is palladium really worth investing in? Recently, while looking at precious metals, I found that many people are still somewhat unfamiliar with this investment asset. Rather than saying it is a star among precious metals, it’s more like an underestimated presence.

First, let’s talk about the basic situation of palladium. This precious metal was discovered in 1803 by a British chemist in platinum ore. It has stable properties and high hardness, even slightly higher than platinum. Currently, the market price relationship is gold > palladium > platinum. The name palladium comes from the ancient Greek goddess of wisdom, which sounds quite storied.

Why does palladium attract attention? Mainly because of its application value. About 80%-85% of global palladium is used in the automotive industry, especially as a key material for catalytic converters to reduce emissions from internal combustion engines. Electronics, dentistry, and metal alloys are also important application fields. As the global automotive industry develops, the demand for palladium has been steadily increasing.

Looking at historical trends helps explain why some are interested in palladium. Over the past 20 years, palladium has generally shown a fluctuating upward trend. From 2000 to 2015, it mostly fluctuated between $177 and $1,100, mostly around $500-$600. But starting in 2015, the situation changed. At that time, liquidity was abundant, and with a small volume and automotive demand support, the price skyrocketed from over $400 to above $2,800 in just a few years. Although it later experienced shocks from the pandemic and Fed rate hikes, the investment appeal of palladium still remains.

From a supply and demand perspective, the fundamentals of palladium are actually quite good. Russia is the world’s largest palladium producer, but its reserves are declining; South Africa is the second-largest producer, and recent strikes and other issues have also reduced output. Less supply and increasing demand support the price.

As an investment asset, palladium has several obvious advantages. First, it can hedge against inflation. Like gold, it is priced in USD, so when the dollar depreciates, it benefits. Second, the market size is relatively small, which means greater price volatility and potentially higher returns for investors. Additionally, palladium’s price movements are highly correlated with gold; in the long run, palladium’s gains often surpass those of gold.

Regarding investment methods, there are now several options. Traditional physical palladium requires physical investment and storage costs. Futures trading requires a higher capital threshold and has delivery date restrictions. In contrast, contracts for difference (CFDs) have lower entry barriers, higher flexibility, can be traded from as little as 0.1 lots, have no fixed delivery date, support both long and short positions, and leverage, with risks manageable through stop-loss and take-profit orders.

For beginners, it’s best to clarify your purpose before investing in palladium. Are you seeking higher returns? Or asset hedging? Or long-term holding? Different goals mean different approaches. Also, keep an eye on overseas market trends, as fees and trading rules may vary.

When choosing between palladium and platinum, from a supply and demand perspective, palladium is healthier, with higher demand and less supply. In price volatility, palladium’s fluctuations are larger, offering greater profit potential for investors. However, platinum has better market liquidity, which is an area where palladium still needs improvement.

Overall, palladium as an investment asset still has its unique value. The key is to choose a suitable trading method based on your risk tolerance and investment goals, while staying attentive to market developments.