Palladium is not an element that features prominently on the science curriculum of high schools, but it is an important element nonetheless. Palladium is one of the ‘platinum group metals‘, although it possesses some unique properties. The main use of palladium is in catalytic converters in the exhausts of cars, which converts harmful byproducts of combustion into other gases. Palladium is also used in hydrogen fuel cells, which could potentially replace the petrol and diesel engines of today. With this bright future for palladium, combined with its restricted supply, speculators have long been interested in the capital gain potential of this precious metal.
In response, palladium ETFs have been created. While the number of specialist palladium ETFs are limited, private investors can also find platinum/palladium ETFs that invest in both and increase the scope for ‘shopping around’ across the fund providers. The historical returns of palladium have been impressive. Palladium was actually the best performing precious metal in 2010, increasing by 96.5 percent over the 2009 closing price of $408.85. Although I would be wary of putting much value on historic gains as a means of predicting the future. Much of the movement in palladium spot prices are caused by speculative capital flows rather than pure industrial demand, although it is always difficult even for academics to identify how much impact it is actually having. Nevertheless, I would be wary of investing in precious metals purely on the basis that they have seen fantastic returns, and that their loudest proponents expect these to continue. This is typical of a bubble market, and many speculate whether precious metals have entered one.
What follows is a list of palladium ETFs traded on the developed equity markets, which I provided to aid your own investment research. This list does not come with specific recommendations.
List of Palladium ETFs
ETFS Physical Palladium Shares ETF – (Ticker PALL)
ETFS Physical Palladium ETF (Ticker PHPD-LSE)
Due to palladiums high value, physical palladium exchange traded funds are very cost effective and the only type available as far as my own research has uncovered. For information on the broader topic of investing in commodities, visit the parent page; How to Invest in Commodities, which details how private investors of various levels of experience can access the commodity markets.