Palladium is a little-known precious metal that has been rapidly gaining steam over the past several years. The metal has been a strong performer, attracting the attention of bullion investors eager to diversify beyond gold and silver. Still, the metal’s relative obscurity in the average bullion investors’ minds leads some to question a palladium investment.
Palladium is usually mined in Russia and South Africa, and just a few companies across the globe manage palladium mines.
Palladium commands a high spot price for several reasons. It is essential in the manufacturing of automobile catalytic converters, a tool that minimizes exhaust in cars. As the world turns a more watchful eye towards greenhouse gases and emissions, car manufacturers have turned towards using more palladium to develop and build more advanced converters. New regulations, coupled with increased demand for cars, have led to a consistently growing demand for palladium over the past few years – driving up the metal’s spot price.
Investors interested in buying palladium have a few options. Some national mints manufacture palladium coins that collectors often prize for their beauty and luster. However, the small palladium market also features a few exchange-traded funds (ETFs) that invest in palladium.
Due to the volatility of palladium, many investors find buying and selling funds with palladium exposure as the easiest way to purchase precious metals. Keep reading for a list of the top five funds that are exposed to palladium and make for good investment opportunities.
A Short List Of Funds With Palladium Exposure
Aberdeen Physical Palladium Shares ETF: The Aberdeen Standard Physical Palladium Shares ETF is one of the most well-known funds with exposure to palladium. The fund holds more than 130,000 troy ounces of the white metal securely in a London vault. This ETF is popular because the prices of the metal directly come from the London Platinum and Palladium Market, one of the world’s leaders for trading both metals. Founded in 2009, the fund has enjoyed returns of more than 17% in most years.
Sports Physical Platinum & Palladium Trust: This fund also holds physical bullion and has returned about 6% each year since its launch in December 2012. Trust holders can redeem their holdings for physical palladium (or platinum, as the fund maintains more than 24,000 ounces of the metal) for physical bullion once they cross a minimum redemption requirement. The trust currently holds more than 44,000 ounces of palladium.
Physical Precious Metals Basket Shares: Another Aberdeen Standard fund, this ETF holds a number of precious metals and features exposure to palladium. Metals are secure in a London vault. As of March 2020, the fund held more than 370 palladium bars, along with 483 gold bars and 191 platinum bars.
VelocityShares 2x Long Palladium ETN: VelocityShares has a number of ETNs linked to indexes based on volatility. ETNs are becoming a popular tool for investors interested in a more efficient way to establish a commodities portfolio, as they do not incur a tracking error. ETNs also do not generate a K-1, a process some investors see as an administrative hassle when it comes to investing and having to review their share of yearly gains and losses.
VelocityShares 2x Inverse Palladium ETN: Velocity Shares also maintains an inverse ETN in conjunction with their long palladium ETN. Both offerings are one of the first to offer leveraged exposure to both metals.
Unique Ways To Invest In Palladium
Since the palladium market is small compared to other precious metals, the list of investment choices is not as robust yet. The above list of financial opportunities represents some of the best ways investors interested in palladium can diversify their portfolio and expose their finances to palladium.
Prospects for the precious metal only continue to grow over the next few years as more investors understand the value, importance, and limited supply of palladium, driving up the spot price for the metal as a result.
HussaiN is a full-time professional blogger from India. He is passionate about content writing, Tech enthusiast & computer technologies. Apart from content writing on the internet, he likes reading various tech magazines and several other blogs on the internet.