Hedging Against Falling Palladium Prices using Palladium Futures

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You can buy palladium speculatively

The price of palladium fell in one month by $ 1500 and is now being adjusted. Is it time to buy palladium?

Palladium price, so steadily growing last year, lost almost $ 1500 in a month, reaching September level. Last week, palladium quotes are actively recovering, being corrected. Current resistance at around $ 1795 so far does not allow him to rise higher. But if the course manages to gain a foothold above, then we will see growth by $ 1975.

You can make a buying decision speculatively at lower timeframes after crossing the moving average of the MACD indicator.

Palladium Futures

Used in everything from dentistry to groundwater treatment, palladium is by far the most versatile metal investment. Only a little while ago, palladium was not nearly as popular as it is today, but due to the incredible economic growth in developing countries—especially China—this jack-of-all-trades metal is steadily growing in importance in the futures markets.

Palladium Contract Specifications
Product Symbol PA
Venue CME Globex, CME ClearPort, Open Outcry (New York)
Trading Hours CME Globex: Sun–Fri 5:00pm–4:15pm CT with a 45-minute break each day beginning at 4:15pm
CME ClearPort: Sun–Fri 5:00pm–4:15pm CT with a 45-minute break each day beginning at 4:15pm
Open Outcry: Mon–Fri 7:30am-12:00pm CT
Contract Size 100 troy ounces
Price Quotation U.S. Dollars and Cents per troy ounce
Minimum Fluctuation $0.05 per troy ounce.
Termination of Trading Trading terminates on the third last business day of the delivery month.
Listed Contracts Trading is conducted over 15 months beginning with the current month and the next two calendar months before moving into the quarterly cycle of March, June, September, and December.
Settlement Type Physical
Settlement Procedure Daily Palladium Futures Settlement Procedure
Final Palladium Futures Settlement Procedure
Delivery Period Delivery may take place on any business day beginning on the first business day of the delivery month or any subsequent business day of the delivery month, but not later than the last business day of the current delivery month.
Grade and Quality Specifications Palladium delivered under this contract shall be a minimum of 99.95% pure
Exchange Rules These contracts are listed with, and subject to, the rules and regulations of NYMEX.
Source: CME

Palladium Facts

Palladium futures can be used as a hedging tool for both producers and consumers of palladium alike. Palladium futures also offer advantages like central clearing and transparency of price among traders.

The top leader in palladium production is Russia, followed by South Africa, and North America. Palladium is part of the same metals group as platinum and they are considered to be alike. However, palladium is more common than platinum because it can also be produced via a derivative of nickel mining. Palladium is mainly used for production in the automobile industry, specifically for automotive catalysts. Palladium is also used in electronics.

Last updated May 2020

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FUTURES/OPTIONS; 2-Week Palladium Rally Falters on Hedge Selling

By The Associated Press

    Dec. 9, 1992

A two-week rally that pushed up palladium futures prices by 13 percent faltered yesterday as sellers moved in to hedge themselves.

Concerns about supply disruptions in Russia and South Africa, the world’s top palladium producers, “has led to a very firm tone in the cash market,” said William O’Neill, senior futures strategist in New York with Merrill Lynch Futures, adding, “But futures prices have finally reached the level where they attracted some hedge selling.”

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While Russia denies it is having trouble producing enough palladium to meet its commitments, market rumors persist that it will not be able to fill all its long-term contracts or will have to go into the open market to make up shortages. Traders said continuing racial strife in South Africa also helped drive prices higher.

The cash market continues strong and there is every reason to believe palladium futures have room to move higher, Mr. O’Neill said.

Platinum futures rallied through the day, then sold off and closed lower. On the New York Mercantile Exchange, platinum for delivery in January lost $1.10 and settled at $370 an ounce; December palladium fell back to close unchanged at $106.75 an ounce. Heating Oil Plunges

Heating oil futures plunged on the New York Mercantile Exchange and most other energy prices were also lower. Light sweet crude for January delivery was 34 cents lower at $18.84 a barrel; January heating oil was 1.06 cents lower at 54.48 cents a gallon; January gasoline was 0.85 cent lower at 51.26 a gallon, and January natural gas was 1.4 cent higher, at $1.971 for 1,000 cubic feet.

Prospects for lower cash hog prices sent pork futures down at the Chicago Mercantile Exchange. Cattle prices were mixed. Hogs for December delivery lost 0.45 cent, settling at 44.30 cents a pound; February pork bellies were down 0.60 cent at 39.10 cents a pound; December cattle were 0.43 cent higher at 77.15 cents a pound, while most other contracts closed lower and January feeder cattle were unchanged at 84.95 cents a pound.

Grain and soybean prices showed little movement in quiet trading on the Chicago Board of Trade.

Investing in Palladium

Palladium, a platinum group metal, is a rare element used primarily in the automotive, chemical, electrical, jewelry and dental industries and may offer investors some of the best opportunities in the precious metals complex in the years ahead. Of the four precious metals, palladium is the lesser known, but appreciated for its monetary benefits as a store of wealth and hedge against inflation. Analysts at the CPM Group, in their 2020 PGM Market Outlook report written exclusively for Monex, believe palladium will continue to perform strongly consistent with its favorable supply and demand fundamentals.

The reason? Although there may be palladium surpluses of mining sources as compared to fabrication usage, any net surplus is relatively small. Of course, if investors are reluctant to buy palladium, this metal’s price may remain weak for a time, but its favorable, let us say tighter fundamentals, as compared to platinum, have investors eager to invest in the less well-known member of the precious metals complex. If a major government mint were to join the Royal Canadian Mint in issuing palladium coinage, it could be quite sensational. As of yet, the United States Mint has gained congressional approval but no palladium coin production schedule has been publicized.

What many investors are discovering is that with tighter markets and stronger fabrication demand, palladium may see stronger prices than platinum in 2020 and beyond. In fact, palladium could move to a premium over platinum at times over the next several years. These tighter fundamentals are not being lost on investors, who may show more interest in palladium than platinum going forward.

The majority of the world’s supply of palladium comes from just two countries: Russia and South Africa. Russia currently accounts for close to 40% of annual global mine supplies, with South Africa producing slightly less. Output from mines in other parts of the world, as well as supplies from recycling efforts, make up the balance of available supplies. The demand side of the equation, though, is what has attracted the interest of investors: fabrication and investor demand has increased solidly over the years. And the primary source of this increased demand? Gasoline-powered vehicles, which require palladium in their catalytic converters to control exhaust emissions. Rapidly growing gasoline-powered vehicle production in the U.S., China, India and elsewhere require increasing supplies of palladium.

With the attractive supply/demand fundamentals, combined with the relatively small size of the market compared to the gold and silver markets, it is easy to see why investors are attracted to palladium as a way to diversify an investment portfolio and speculate in an often-volatile and fast-moving market. Monex has been a leader in physical palladium investments for many years and would be pleased to discuss how a palladium investment could be incorporated into your personal investment program.

Palladium Bullion

Buying palladium bullion is a convenient and cost-effective way to invest in the often-exciting palladium market. With the market’s impressive supply/demand fundamentals, and growing prospects for a potential supply squeeze in the years ahead, an investment in physical palladium bullion may be one of the best bets on the board now and in the years ahead. Monex offers palladium bullion in 10-ounce bars of .9995 fineness for delivery, storage and as a trading vehicle in the Monex Atlas Account. Each bar we offer is hallmarked by a leading refiner to certify the bar’s weight and purity.

Palladium Bullion Coins

Purchasing palladium bullion coins can be an outstanding way to invest in the palladium market, as coins are easy to buy, hold, sell and trade. In addition, should it be necessary, coins can be divided up into smaller units, unlike larger bullion bars. Monex offers Canadian Maple Leaf palladium bullion coins exclusively, in units of 10 one-ounce coins. Each coin is comprised of pure .9995 fine palladium and is truly beautiful. Palladium Maple Leaf bullion coins are produced in accordance with the Royal Canadian Mint’s exacting standards, and each coin’s weight, purity and face value are guaranteed by the Canadian government

What are the Top-Ten Palladium Facts?
Monex’ Top-Ten Palladium Facts are:

  1. Palladium is the least appreciated of the four precious metals as an investment, but
  2. Palladium prices have appreciated more than the more popular precious metals over last ten years.
  3. Congressional approval has paved the way for the first Palladium Eagle from the US Mint.
  4. US Mint’s Palladium Eagle will use the famed “Mercury Head” dime obverse design.
  5. A United States palladium coin will endorse the metal as an alternative bullion investment.
  6. Recent advances in Selective Catalytic Reduction reduces the quantity of palladium per vehicle.
  7. During a temporary supply squeeze, palladium prices exceeded gold prices, reaching $1,000 per ounce.
  8. South Africa mine production fell over most of the past decade, and is projected to decline further.
  9. For the most part, palladium is produced as a by-product of other mining.
  10. About 40% of the worlds mining supply comes from just one Russian company, Norilsk.

Where does palladium come from?
The element Palladium has the symbol Pd and atomic number 46. It is a rare and lustrous silvery-white metal discovered fairly recently, in 1803 by William Hyde Wollaston. In the earth’s crust, palladium is found as a free metal and also alloyed with gold and other platinum group metals. It largely comes from mining operations of nickel and copper ore deposits, and also from platinum mining in South Africa. Some is found in a few places as a primary metal, such as mining operations in Montana.

How did the element palladium get its name?
Palladium was discovered in England in 1803 by William Hyde Wollaston. Palladium gets its name from the asteroid “Pallas” which was discovered at about the same time, and is derived from the Greek name Pallas, goddess of wisdom.

Why should I invest in palladium?
There are many good reasons to put some precious metals in an investment portfolio. It is anticipated that supplies of Palladium will be tight in years ahead, while at the same time, see growth in industrial usage. This tight supply and increased demand suggests stronger prices than alternative metals. Furthermore, an introduction of a United States palladium coin could very well be an endorsement of palladium as a bullion alternative, and put increased attention on palladium markets in general.

Is palladium a good investment in 2020?
CPM Group analysis in a 2020 special report expects palladium investments to be strong due to tight supplies and increasing industrial usage. This tightness should serve as strong underlying support for palladium prices during 2020. For more current monthly CPM analysis and reporting, please contact your Monex Account Representative.

Is platinum or palladium better?
Per cubic inch, platinum is significantly (75%) more dense than palladium. As such, platinum would be more efficient to use in their chief fabrication usage as an autocatalyst, if it were not for platinum’s higher scarcity and cost. Also, palladium is far less recognized as a monetary metal, so overall market liquidity may be better for platinum products. Certainly, platinum’s value premium to palladium suggests that it is a much better metal, but palladium values are approaching platinum prices, and it is possible that palladium prices could reach or exceed platinum prices in the future.

Should I buy palladium or platinum?
Palladium has relatively healthier bullish fundamentals that have been seen in strong prices in recent history. In comparison with the other precious metals, palladium was the best performer, gaining over 20% in 2020. Palladium typically has wider price ranges and therefore greater price volatility, which presents both greater risks and opportunities.

What are ways of investing in palladium in 2020?
The best way to invest in palladium is by gaining ownership and title to physical palladium bullion, in ether coin or bar form. Derivative investments are available such as NYMEX palladium futures contracts. However, be cautious that palladium is less appreciated as a monetary metal, so select only the finest and most popular forms of palladium. Monex’ top choices for investing in palladium to consider are #1, The Royal Canadian Mint One-Ounce Palladium Maple Leaf, and #2, highly refined palladium ingots of at least 9995 fineness.

Why should I invest in palladium with Monex?
Monex has been America’s trusted name in palladium and other precious metals investments for 50 years. With customer transactions now exceeding $55 Billion, and an active two-way, buy and sell market during its 11-hour trading day, Monex has never failed to deliver every ounce of metal customers purchase. Monex offers extremely competitive prices on its palladium products, and posts both real-time ask and bid prices online and through its mobile app, the Monex Bullion Investor available for both Apple and Android smartphones. Customers and prospective customers may inquire about their particular questions quickly and efficiently, along with discussing current trends and market information with a friendly and knowledgeable Monex Account Representative. Meaningful investments in physical palladium are valuable, and Monex can arrange storage of an investor’s metal at a bank or depository. Customers have the ability to borrow funds from Monex Credit Company using their palladium as collateral. Monex offers the ability to place limit-orders and stop-orders to purchase or sell if and when a selected target price is reached.

What palladium products does Monex offer to investors?
Monex offers the two most popular ways to own palladium, including pure platinum bullion bars and bullion coins. Pure 10-ounce .9995 fine palladium bullion bars are in the form of ten-ounce ingots, which are stamped with the refiner’s hallmark, exact weight and fineness, and serial number. Monex offers legal tender, pure palladium bullion one-ounce Canadian Maple Leaf coins produced by the Royal Canadian Mint.

Should I invest in palladium bars or coins?
When taking personal home delivery of precious metals, especially with palladium, most would agree that coins are simply a better choice. On the other hand, if you choose to use bank/depositor delivery, palladium bullion bars are more cost-efficient and likely your best choice.

Does the face value of a Palladium Maple Leaf coin affect its worth?
The face value of the Palladium Maple Leaf coin is but $50 Canadian and is insignificant as it relates to its intrinsic commodity melt value. Therefore, the face value is unimportant and really does not affect its worth. However, having the currency value affixed by Canada is quite important as it makes it a legal-tender coin and not a bullion ingot/round.

What is the minimum amount of palladium I can buy from Monex?
The minimum purchase amount for palladium at Monex is 10-ounces, whether for bullion or coin form. For legal tender Canadian Maple Leaf palladium bullion coins, the minimum purchase is one unit, containing 10 one-ounce pure platinum coins.

What is the process of investing in palladium with Monex?
Once you have decided on the type and quantity of palladium to purchase, your Monex Account Representative will assist you in executing your order over the phone, and your purchase and price will be confirmed on a tape recorded line after your acknowledgment. A written confirmation will then be sent to you with the details of your order. Payment may be made after you order, but must be initiated on the day of purchase, which means you must mail or wire funds on the day of your purchase. You can have your metal (a) shipped to your home; (b) made available for pick-up at over 30 facilities across the U.S. and Canada; or (c) have your metal delivered to a bank/depository for storage.

What forms of payment does Monex accept?
For bank wires from domestic banks, the funds are good (reliable) upon receipt. For bank wires of U.S. funds from foreign banks, the funds are good upon bank verification. Cashier’s checks and personal checks are also accepted; however, a hold-funds period of from five to ten days and bank verification are required. Cash, credit cards, convenience checks, payment in foreign currency or checks drawn on foreign banks are not acceptable.

Is physical palladium taxed?
In regards to sales tax on palladium purchases, Monex only collects sales tax on purchases for home delivery which are under $1,500 for California residents and under $1,000 for New York residents. As a general rule for investment gains, profits are only taxable when you sell palladium, no matter how long you own it. However, you should rely on your tax advisor for such advice.

Will Monex report my palladium purchase to the government?
Monex is not required to report customer palladium purchases to the IRS. However, the IRS does require Monex to report palladium sales by customers to Monex if the sale is palladium bullion bars of 100 or more total ounces.

How do I know the palladium products I get from Monex are authentic.
Monex guarantees the authenticity and fineness of all its bullion bars and coins. All palladium bullion bars are imprinted with the refiner’s name, exact weight and fineness. Palladium Maple Leaf coins are produced by the highly respected Royal Canadian Mint. The RCM takes great care in issuing its bullion coins with the latest security improvements. And, Monex is authorized by the RCM as one of its Bullion DNA dealers to verify the authenticity of certain Maple Leaf coins using a laser-marking and precision radial line technology verification system.

How long does it take to receive my palladium?
Monex carries substantial precious metals inventories at several independent and highly secure shipping facilities across the country. For the most part, metals are earmarked for customers as soon as their purchase is made. It would not be unusual that palladium products, as scarce as they are, may be acquired or on order to meet extraordinary demand or unique delivery requests. Secure packaging and release of palladium bars or coins to an insured carrier is not done until satisfactory reliable good funds are confirmed. Bank wires are reliable and confirmed as good funds upon receipt. Although cashier and personal checks may clear an issuing bank account, it does not preclude the canceling of payments at some financial institutions. Absent a letter of guarantee from the issuing bank, normal cashier and personal checks are considered reliable “good funds” after five business days. Note, for example, that Wells Fargo Bank has a hold funds policy of five to seven days or more. Because of the high value packages, the shipping facilities use multiple verification means and individual monitoring and recording cameras to assure the integrity of every shipment. On average, your metal will leave the shipping facility about two to five days following confirmed reliable good funds. You will be given a tracking number for the shipment by e-mail or by your Account Representative. During times when the shipping volume is extremely high, as it was in 2008, you will be notified if any delays are expected. For deliveries to a bank/depository you will receive notification directly from the facility upon delivery, which by law is required within 28 days.

Can I track my palladium shipment online?
Once Monex has received payment and the funds are confirmed and considered reliable good funds, Monex will direct one of its independent shipping facilities to package and assign it to either USPS or UPS for delivery to you. Once Monex has received a tracking number for your shipment, you will be notified by email or telephone. If you prefer to pick up your palladium at one of the over 30 vault pick-up locations, you will be notified when it arrives and you can take possession at your convenience, any time within a couple of weeks without storage costs.

Is my palladium investment insured?
All shipments of palladium products to you are insured against loss or damage in transit. If you decide to have your palladium delivered to and stored by a bank/depository, the metal is fully insured in transit and also while in storage.

Can I store my palladium investment through Monex?
Monex can arrange for the secure storage of your palladium bullion or coin investments. Monex will deliver your palladium with full title and ownership in your name to one of the independent bank/depository facilities that provide storage for Monex customers. These bank/depositories include Brink’s in New York. When your metal is received by the bank/depository, the custodian of the facility will send you a document acknowledging the receipt and your ownership of the palladium being stored in your name.

Where is the best place to sell-back palladium?
Since 1967, Monex companies have made it a priority to buy back coins and bars that customers have purchased at attractive then-current Monex bid prices. Its multi-billion dollar, two-way buy and sell market is a hallmark and tradition at Monex, and is your assurance of liquidity for your palladium bullion or coin investment. Under certain circumstances, Monex may buy highest investment quality palladium that was purchased from another respected metals dealer. Be aware that some restrictions and additional verification costs may apply. Please contact a Monex Account Representative for additional details.

How does the palladium sell-back process work?
Selling your palladium bullion or coin investment back to Monex is a relatively easy process. When you are ready to sell your palladium, just contact your Monex Account Representative for shipping instructions. Shipments must then be sent by USPS registered and insured mail with a return receipt. Customers are responsible for fully insuring their shipments, until received by Monex. Once the shipment is received and verified you will be notified and able to sell your palladium. Proceeds of your sale will be sent to you in the form of a check or bank wire, or if you prefer, credited to your account. If your palladium is in storage through Monex Credit Company at one of the bank/depositories, you can sell your metal over the phone at any time without delay. The transfer of title to the palladium from you to Monex will follow your sale, and the bank/depository will notify you by mail that the transfer of title has occurred. There are no delivery charges when your palladium stored through a Monex Atlas Account is delivered to or from a bank/depository storage facility.

Can I borrow cash against my physical palladium?
With storage of palladium through Monex at Brink’s, you can use your metal as collateral to borrow cash against it whenever you want. Monex Credit Company, a California Finance Lender, offers cash loans of up to 75% of the value of your metal while you retain full title and ownership. Interest rates vary but have been 5.9% per annum since 2006. There are no loan set-up fees or penalties for repayment at any time. You can call your Account Representative and have the cash proceeds of the loan immediately sent to you, or you can use the loan to pay for a purchase.

Visit our Live Prices page for up to the minute palladium prices or visit our palladium price charts page to view historical palladium pricing data.

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