Palladium vs. Platinum
Between palladium and platinum, which precious metal is better? We will go through the pros and cons of both precious metals, their characteristics, and how they differ from each other.
Table of Contents
Palladium Compared to Platinum as an Investment
What is Palladium?
Palladium is a type of precious metal with 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 and electronics industries.
What is Platinum?
Platinum is the most common precious metal used to make wedding bands. Like palladium, platinum is also part of the Platinum group of metals. It 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.
Top Differences Between Platinum and Palladium
Density: Platinum is stronger and denser than palladium. It is also resistant to corrosive materials and rust.
Price: Palladium has been gaining ground, while platinum has fallen because of the greater supply surplus in the platinum market.
Which Metal Should You Invest In?
Due to their unique chemical makeup, platinum and palladium are almost exclusively used in the industrial sector, mainly to make catalytic converters. However, the percentage of platinum and palladium used in the industrial sector varies annually. Still, most of the precious metals are used in the industrial sector.
Only about 2.5% of platinum and palladium goes towards investment. Investment demand for 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 minimal.
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 recessions.
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. Palladium is a weak asset in a recession, unlike gold or silver, which is a safe asset.
What Moves the Price of Palladium and Platinum?
Three factors move the price of palladium and platinum:
- Automobile and Manufacturing Industry
- Investment Demand
- Demand for Jewelry
These factors determine the price of palladium and platinum. However, the difference between platinum and palladium is that palladium relies more 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. 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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- Is Platinum Better Than Silver?
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