Palladium vs. Platinum

Between palladium and platinum, which precious metal is better? We will address that question in this article. We will also go through the pros and cons of both precious metals, their characteristics, and how they differ from each other.

What is Palladium?

About Palladium

Palladium is a type of precious metal that has a silvery and white appearance. The metal belongs to the Platinum Group Metals and was first discovered in 1803. Palladium was initially used in Jewelry industries and is now largely used in the automotive industry and electronics industry.

Pros and Cons of Palladium

Pros and Cons of Palladium

Pros

  • Durable: Palladium rings are very durable, and the metal is harder than platinum.
  • Affordable: Palladium was always more affordable than platinum, especially for jewelry, however, a recent increase in demand has driven the price of palladium upwards. Now, the price of platinum and pretty much the same.
  • Lightweight: There are differences between platinum and palladium, as palladium weighs less and its weight is similar to gold, which means palladium jewelry will feel lighter on the body than platinum jewelry.
  • Litte Risk of Triggering Allergies: Those who have sensitive skin can get allergies from jewelry. Nickel, a critical element in some metals, causes the allergy, and palladium is nickel-free, which means it is less likely to trigger an allergic reaction.

Cons

  • Rarity: Palladium is 30 times rarer than gold and 15 times rarer than platinum.
  • Lightweight: Some people don't like lightweight jewelry, so they opt for platinum.

What is Platinum?

About platinum

Platinum is the most common precious metal and is used to make wedding bands. Like palladium, platinum is also part of the Platinum group of metals and has been used for different purposes for centuries. Platinum is a harder metal than palladium, which is why platinum wedding bands are sturdy and durable.

Pros and Cons of Platinum

Pros and Cons of Platinum

Pros

  • Durable: Platinum is extremely durable, like palladium, which is why platinum jewelry, especially rings, can tolerate a substantial amount of stress.
  • Litte Risk of Triggering Allergies: The platinum used for wedding and engagement rings is about 90 % to 95 % pure, which means it only contains a small amount of alloy, which can cause skin allergies.

Cons

  • Cost: Platinum is very expensive, and you will need to pay more for a platinum ring than for a gold ring.
  • Weight: Platinum weighs more than palladium, which means platinum jewelry would feel heavier on the body.

Platinum vs Palladium: Key Differences?

Density: Platinum is stronger and denser than palladium. It is also resistant to corrosive materials and rust.

Price: Historically, the platinum market has been bigger than the palladium market, however, recently, palladium prices have surpassed platinum prices.

Platinum vs Palladium: Which Metal to Invest in?

Due to their unique chemical makeup, both platinum and palladium are almost exclusively used in the industrial sector, particularly to make catalytic converters. However, the % of platinum and palladium used in the industrial sector varies annually, but the vast majority of the precious metals are used in the industrial sector.

Only about 2.5 % of platinum and palladium goes towards investment. Investment demand for both ETF holdings and bullion has been declining for several years. The prices of platinum and palladium respond to supply and demand forces.

Since the investment in precious metals is small, it can influence their prices if the demand goes upwards or downwards. Generally, the investment demand for PGMs is very small.

Is it a Good Idea to Invest in Platinum or Palladium?

Investors' biggest obstacles are a recession and stock market crashes. Since 1970, the United States has faced seven recessions, and the platinum price has suffered during the recession periods.

Investors are aware that the majority of platinum is used in the auto industry, so if the size of the economy is shrinking and the platinum supply is falling, the price and demand for the precious metal will drop automatically, and it will suffer from supply shortages.

On the other hand, the price of palladium also suffered during the recession periods, only rising modestly in one recession. This shows that in a recession, palladium is a weak asset, unlike gold, which is a safe asset.

What Moves the Price of Palladium and Platinum?

There are three factors that move the price of palladium and platinum:

  • Demand for Jewelry
  • Automobile industry
  • Investment demand

These factors determine the price of palladium and platinum. This means when sales of vehicles increase, the price for both metals decreases. However, the difference between platinum and palladium is that palladium is more reliant on its industrial use.

Should you Buy Palladium or Platinum?

Your risk tolerance will decide your choice. The spot price of palladium is more volatile than platinum's spot price, and while palladium can outperform platinum in bullish markets, it can underperform in bearish markets. Learn more about investing in these precious metals here at Focus on the User.

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