Gold vs. Palladium
Are you having difficulty choosing between gold or palladium? We will discuss gold and palladium and state which of the two precious metals is better.
Table of Contents
Comparing Gold to Palladium as an Investment
What is Palladium?
Palladium is a soft silvery-white metal that was discovered in the 19th century. Along with platinum, osmium, rhodium, iridium, and ruthenium, palladium is part of the Platinum group metals (PGM), which have a silvery-white appearance and are typically inert. Palladium is popular for those looking to diverisfy their investment portfolio.
What is Gold?
Gold is a chemical element with the atomic number 79 and symbol Au, which makes it one of the highest atomic elements that occur naturally. Gold is orange-yellow, bright, malleable, dense, and soft in its pure metal form. Gold has long been the most popular choice when investing in precious metals.
Gold or Palladium: Which is Better?
While both palladium and gold are lauded in the jewelry industry for their appearances, palladium is considered more precious than gold. Palladium is valuable and has become a significant investment rival to gold in recent years.
While palladium is not as well-known as gold, the price of palladium is higher than gold, as it became the most expensive precious metal in January 2019. However, during the global pandemic in 2021, palladium prices fluctuated. However, the metal remains the most expensive of the four precious metals.
Palladium is tougher to mine than gold and lower in numbers than silver and gold bullions.
Is Investing in Palladium a Good Move?
Before you invest in palladium, you should know more about it. Palladium is used in gold alloys in the biomedical, aerospace, and electronics industries. However, the biggest use of palladium is in the automobile industry, which makes catalytic converters.
The demand and supply of palladium affect the price of palladium. Suppliers have struggled to keep up with the huge demand for palladium for catalytic converters in the auto industry. Palladium is one of the rarest metals in the world. 40% is mined in South Africa, while 44% is mined in Russia. The rest of the precious metal comes from Canada and the United States.
However, all types of physical metals are suitable investments because being in control of a tangible asset enables you to have command over your wealth. Like gold, palladium can also act as a hedge, with palladium prices moving inversely to the Dollar.
When there is economic uncertainty or turmoil, demand will automatically increase for physical metals. However, the huge industrial demand for palladium does leave the metal reliant on world economics. A healthy world economy will produce tonnes of cars, increasing palladium's price. A struggling economy will produce fewer cars and decrease palladium's price.
Which Physical Metal is a Better Investment Option: Gold or Palladium
Choosing between palladium or gold depends on your investment goals. Gold prices rise over long stretches, so if you want to hold onto the metal for a decade or two, you should invest in gold. That being said, palladium is suitable for making quick or short-term investments.
There was a 40% increase in the price of palladium, suggesting there is a chance to gain wealth by investing in palladium over the short term. Gold investors looking to supplement their existing assets are sometimes interested in buying palladium.
Some investors purchase palladium and then convert their profit into gold. However, objectively observing the situation, it is difficult to say which metal is the better investment option.
How Can you Invest in Palladium?
Investors interested in commodity investment to hedge against inflation can invest in palladium to reduce their portfolio risk. However, the palladium market is small. There are only a few companies that produce the precious metal.
An obstacle for retail investors is that there are only a few palladium exchange trade options in the market, making it challenging for them to access palladium. There are other investing options as well:
- Commodity ETFs (Exchange-Traded Funds): ETFs are a more liquid and convenient means of buying and selling palladium, gold, platinum, or silver. However, investing in ETF doesn't give you access to the metal, so you don't have a claim on the precious metal.
- Mutual Funds and Common Stocks: Shares of precious metals are leveraged to price changes of precious metals such as palladium. Unless you know how mining stocks are valued, it may be better to stick to agents or managers who know the whole process.
- Options and Futures: The options and futures markets offer leverage and liquidity to investors who want to make big investments in palladium or other metals. With derivative products, investors can have the greatest potential profit or loss.
- Bullion: Bars and coins are for those investors only who have a safe place to keep them. If you expect the worst outcome from your investment, investing in palladium bullion bars is not a safe option.
The Risks of Investing in Gold or Palladium
Every investment that you make comes with a set of risks. While some investments may come with a level of security, investing in precious metals such as palladium or gold is risky. Technical imbalances can abruptly decrease the prices of precious metals. However, it is better to invest in precious metals than stock during uncertain economic conditions.
The Benefit of Investing in Gold or Palladium over Stocks?
Precious metal investments are more beneficial than investing in stocks. Palladium or gold can be a hedge against inflation since they have no credit risk and have a high level of liquidity and intrinsic value. Investing in metals will also diversify your portfolio.
Precious Metal Resources
- Silver vs. Platinum
- Gold Mining Stocks vs. Physical Gold
- Reporting Precious Metals Like Gold With Government & IRS
- Most Precious Metals on the Market
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