Investing
While gold may be the best known and most popular precious metal, some people looking to buy precious metals may be looking for something more. Gold’s performance can be almost boringly stable over the long term, which is great for those looking to maintain the value of their investments over a period of time.
But sometimes precious metals buyers want to make significant short-term gains too. That’s where other precious metals can play a role in diversifying asset portfolios and helping grow wealth.
Most precious metals buyers are aware of silver as an alternative to gold, and the fact that silver often makes greater gains percentage-wise than gold does. But few people branch away from silver and gold and look to other precious metals such as palladium.
By failing to think outside the box, they could be missing out on significant amounts of potential gains. Investors who haven’t looked at the palladium price vs. the gold price may be shocked to find out that palladium was once more expensive than gold.
Palladium belongs to what is known as the platinum group of metals: platinum, palladium, rhodium, ruthenium, iridium, and osmium. Palladium was only discovered in 1803, and it is a relatively rare silver-colored metal that is about 15% denser than silver.
Palladium ore deposits are very rare, with only a handful of mines around the world containing palladium, including in South Africa, the United States, Canada, and Russia. Russia produces about 40% of the world’s supply of palladium, with South Africa contributing another 40%.
Palladium has numerous industrial uses, most importantly in automobile catalytic converters. But it’s also used in electronics, jewelry, and dental applications.
Because of palladium’s tremendous rise in price between 2018 and 2022, it has received a lot of interest and attention from people who otherwise would only think about buying gold or silver.
Gold is significantly denser than palladium and has been used by consumers and trusted by investors for thousands of years before palladium was even discovered. For much of that time, gold was also far more valuable than palladium. But things have changed.
Thinking about investing in palladium vs. gold used to not even be a consideration. But changing market conditions drove the palladium price higher starting in 2018.
In December of 2018 the palladium price exceeded the price of gold, and continued to grow. By 2020 the palladium price exceeded $2,000 an ounce, and grew to over $2,500 an ounce.
Palladium peaked in March 2022 at over $3,400 an ounce, a price that gold has not yet reached. But since then, palladium’s star seems to have faded, with the palladium price currently sitting at around $1,000 an ounce.
That’s not bad, but with the gold price more than double the palladium price today, gold is once again getting all the attention.
After Russia’s invasion of Ukraine, fears of Russian sanctions impacting the palladium supply made many people fearful that palladium supplies would shrink. That helped push the palladium price to record highs.
Those fears never materialized, however, and so as a result the palladium price has fallen back to more normal levels. This highlights one of the reasons palladium has often been on the fringes of precious metals investment.
Gold can be a good fit for those people who want consistent value and growth over time but who also want stability. Palladium has seen tremendous growth, but it has also seen some tremendous falls in price.
Historically palladium has been less valuable than both gold and platinum, and future trends in industrial use of palladium could keep its price below the gold price for quite a while.
The major factor that drives the price of palladium is its use in automobile catalytic converters. With ever more stringent automotive emissions standards, catalytic converters have to become ever more efficient.
For years platinum was the dominant metal used in catalytic converters, but it was expensive, as expensive as or more expensive than gold. Palladium was comparatively cheaper, so many companies began to make the switch to palladium in catalytic converters instead of platinum.
But that increased demand for palladium helped cause the price to rise, with palladium becoming far more expensive than platinum, and even more expensive than gold. Since it can take years for car manufacturer supply lines to switch from palladium to platinum and vice versa, most companies stuck with palladium despite the high price.
That decision seemed to be vindicated, as palladium prices have since fallen significantly, and are now roughly equal to platinum prices. As the economy continues to slow, and as new car sales fall, demand for palladium could fall.
Coupled with the lack of supply shocks from Russia and South Africa, there doesn’t seem to be anything going on today that would boost the price of palladium. But as we’ve seen before, that could all change in an instant.
Events in Russia or South Africa could throttle world supply, which could send the palladium price soaring yet again. Given palladium’s previous price history, which has included at least two instances of massive price increases, another palladium price jump can’t be ruled out.
Unlike most other metals, the primary demand for gold comes from jewelry and investment demand. The most recent data for gold shows that jewelry demand made up almost 50% of global gold demand.
Much of that jewelry ends up in countries like India and China, where individuals have traditionally purchased gold jewelry, and not coins and bars, as their primary source of gold investment. The Indian wedding season, in particular, sees a dramatic boost in gold demand each year.
Demand for non-jewelry gold as an investment, whether in the form of coins or bars, makes up another 20% of global gold demand. Industrial use in technology products forms about 7% of demand, and the remainder of demand comes from central bank gold purchases, which in recent years have reached record levels.
Investment demand is largely driven by concerns about the economy and the state of the financial system. Anything that might affect the economy negatively, weaken the dollar, or result in more inflation generally results in an increase in the current gold price.
Given the rise in inflation over the past few years, plus the increasing likelihood of recession within the next year, investment demand for gold has remained strong since 2020. And if the next recession ends up being severe, rising gold demand could result in a rising gold price.
Even when the gold price increases, however, it’s not as volatile as palladium. Its increases are more measured and steadier, and it tends to increase for longer stretches of time.
The palladium price, on the other hand, can be driven by speculative demand from investors and industrial users, with some companies stockpiling huge amounts of palladium to try to protect against future price increases. So when it comes to deciding between palladium vs. gold, you’ll have to do some thinking.
If you’re looking to hold onto your precious metals for 10-20 years or longer, you’re probably going to be more interested in buying gold. Since the turn of the century, gold has been one of the best performing assets around. For a safe haven that offers long-term asset protection and a hedge against inflation, it’s hard to argue against gold.
People with a more short-term focus, or those who don’t mind switching up the allocation of their investments and moving from gold to palladium or vice versa, might be more interested in looking at palladium or other precious metals.
Short-term price increases in palladium have provided benefits to palladium owners in the past, although the volatility and unpredictability of palladium prices might make it less than ideal for growing and protecting wealth in the short term.
With a precious metals IRA you can hold not just gold and silver in an IRA, but also palladium and platinum. A precious metals IRA allows you to hold precious metals in an IRA and make gains tax-free until you decide to take a distribution.
You can even perform a gold 401(k) rollover, rolling over existing assets from a 401(k), 403(b), TSP, IRA, or similar account into a precious metals IRA that can then purchase precious metals like gold, silver, platinum, and palladium. That means that instead of having to choose between palladium vs. gold, you can easily choose both.
If you think you’re ready to begin buying precious metals, whether it’s gold, silver, palladium, or something else, give the experts at Goldco a call today. Their years of experience in helping people just like you protect and grow their wealth through purchasing precious metals can help you navigate the process with quickness and ease.
Don’t miss out on any of the benefits of owning precious metals by sitting on the sidelines and wondering what if. Put the power of gold and palladium to work today to help your assets grow to their maximum potential.
This article was originally published in November 2019 and was revised and updated in December 2023.
Free Precious Metals Guide
Complete the Form Below
Free Precious Metals Guide
Complete the Form Below
What a wild ride it has been for gold so far this year While gold ended last year on a strong note, having hit new all-time highs late in the year, no one expected gold to go on such a tear so...
Anyone who has been alive long enough has seen the operation of business cycles The euphoria of the boom phase gives way to the recession of the bust phase, and the cycle repeats itself This...
If you’ve built up significant amounts of retirement savings, you’re probably concerned about protecting them against loss And with the fear of recession or stock market crashes always at the...
