The Bullish Case For Palladium Is Getting Stronger…
Long time readers know I’ve been bullish on palladium for quite some time. In fact, I’ve had subscribers of my flagship commodity investing service, the Commodity ETF Alert, buying the metal on dips over the past year.
And now their patience is finally starting to pay off.
Take a look…
As you can see, palladium is breaking free from the trading range (red lines) that kept it under wraps for all of 2013. The recent rally has the metal taking on multi-year highs near $800 an ounce.
And the best part is, this is likely just the start of an extended run higher for the commodity.
After all, the metal’s supply/demand fundamentals are overwhelmingly bullish. Not only do South African labor worries have investors on edge, but a structural supply deficit is set to consume this essential industrial metal market over the next few years.
But that’s just the start of it…
Two new bullish factors have developed over the past few weeks. And trust me when I say, they have the potential to really light a fire under the price of palladium.
First of all, we all know the situation in Ukraine is getting messy. So I won’t bore you with all the details here.
All you really need to know is this…
Russian President Vladimir Putin recently annexed the Crimean peninsula and there are worries he might go for Eastern Ukraine next. In response to Putin’s moves, the US and Europe are applying sanctions on Russia.
What does that have to do with palladium?
Russia holds the world’s largest above ground stockpiles of the metal. What’s more, it’s also one of the world’s largest miners of palladium along with South Africa. If trade sanctions are put into place, there’s a very good chance Russian palladium exports will slow to a trickle.
Obviously, if a major source of global supply goes offline, it will make an already bullish fundamental picture even more so.
And that’s not all…
Palladium investors have also learned that two physically backed palladium ETFs launched in South Africa last week. Standard Bank Group and Absa Capital posted their commodity ETF offerings on the Johannesburg Stock Exchange.
Since these newly minted ETFs hold physical palladium, there’s a legitimate concern they’ll make an already tight market even tighter.
Bottom line…
Thanks to these new developments, the bullish case for palladium is getting even stronger. One of the best ways for US investors to capitalize on a continued run higher in the metal is through the ETFS Physical Palladium Shares (PALL).
Until Next Time,
Justin Bennett
Category: Commodities
