Is palladium better than gold? This is a question that many investors are asking given the current market conditions and the rather advantageous prices for both metals. Furthermore, there are some optimistic forecasts produced by well-known foreign investment banks that favor the white metal.
Sure, palladium has been a fairly favored precious metal within the Precious Metals industry in the past. Now it would seem strange to assert that this metal could have the qualities of a front-runner. Compared to a 7.6 percent increase in the price of gold since the start of the new year, the price of palladium is down nearly 6% percent.
So why might palladium be better than gold? According to research conducted by Bloomberg, it is asserted palladium has a solid fundamental basis behind it, which is worth remembering.
Palladium is mainly used for catalytic converters, in particular for petrol-powered vehicles and according to the most recent estimates, an increase in the demand for vehicles in China is expected such as to be able to push upwards the demand for the metal. Under current technical conditions, a rally, albeit presumably of limited duration, is already underway. On the contrary, gold is ringing a consecutive series of increases that are far too high. And in the financial markets, experience teaches us that too high a growth in the short term is often followed by a retracement of quotations, even conspicuous.
The gold market is benefiting from both critical geopolitical news and uncertainty in China’s stock market, while palladium looks much more attractive based on its fundamentals.
And this is understandable because the demand for cars is sure to increase, which is good news for palladium. In a recent Scotiabank report, Carlos Gomes expects auto sales to hit global record levels in 2016, noting that sales in North American markets grew 7 percent in 2015, the highest in nearly 20 years.
In any case, the fundamental rule of diversification is always valid for all investments: “never put all your eggs in one basket”. Diversifying a part of the liquidity destined for investments between Gold and Palladium is a rather wise rule.