Gold vs. Palladium

Gold vs. Palladium

Are you having difficulty making a choice between gold or palladium? We will discuss both gold and palladium and state which of the two precious metals is better.

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.

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 when in its pure metal form.

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 useful and has become a major 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 of 2019. However, during the global pandemic in 2021, the Palladium prices fluctuated, but still, 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?

Is Investing in Palladium a Good Move?

Before you invest in palladium, you should know more about the metal. Palladium is also used in gold alloys in the biomedical, aerospace, and electronics industries. However, the biggest use of palladium is in the Automobile industry, as it is used to make 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 a good investment 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 USD.

When there is economic uncertainty or turmoil in the world, 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.

Recently, there was a 40% increase in the price of palladium, so there is a chance to gain wealth by investing in palladium over the short term. Gold investors looking to supplement their existing assets are also 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 who are interested in commodity investment to hedge against inflation can invest in palladium to reduce their portfolio risk. However, the market for palladium 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, which makes it tough for retail investors to access palladium. There are other investing options as well:

  • Commodity ETFs (Exchange-Traded Funds): ETFs are 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.
  • Mutal Funds and Common Stocks: Shares of precious metals are leveraged to price changes of the precious metals such as palladium. Unless you have no clue of how mining stocks are valued, it may be better to stick to agents or managers who have the knowledge of 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 are expecting the worst outcome from your investment, then investing in Palladium bullion bars is not a safe option.

The Risks of Investing in Gold or Palladium?

The Risks of Investing in Gold or Palladium?

Everyone 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, during uncertain economic conditions, it is better to invest in precious metals than stock.

The Benefit of Investing in Gold or Palladium over Stocks?

Precious metal investment is more beneficial than investing in stocks, as 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.

Conclusion

This article will help you understand the major differences between palladium and gold. The information will also enable you to measure both the metals' pros and cons and then invest in one of them.

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