In his recent Penny Stock Detectives article
, editor Danny Esposito reveals that current supply/demand fundamentals favor palladium and palladium investing. He notes that 65% of the world’s supply of palladium is used to build catalytic converters found in many cars today. Another 10%-20% is used in many industrial applications like electronics, chemicals and glass, with the balance of palladium held for investment purposes. Esposito argues that, despite robust demand, supply is in short supply, as 85% of the world’s palladium comes from Russia and South Africa, and both countries are having serious issues.
“Car sales worldwide are expected to rise better than five percent in 2012, which means more than 79 million vehicles are expected to roll off car manufacturers’ lots,” said Esposito. “That translates to over six million ounces of palladium consumed, as all of these vehicles must come equipped with catalytic converters.”
While the demand side of palladium investing
looks strong, the supply side looks weak, according to Esposito. It is estimated that Russia and South Africa supply roughly 85% of the world’s market in the precious metal.
Russia made a conscious decision years ago that palladium was important to it and so created a stockpile, noted Esposito. In 2010, Russia’s stockpile sent one million ounces of palladium into the world market. In 2011, 750,000 ounces were sent into the world market. In 2012, the Russian government has hinted that the amount it will release will be well below 2011’s amount, with some estimates coming in at below 400,000 ounces.
Russia will not provide the world with how much of its stockpile it has left, but the dramatic decrease in supply has many concerned that the stockpile is dwindling fast.
Couple this with the fact that the other major supplier in the world, South Africa, is plagued with mining strikes from workers demanding better pay and working conditions, while some mines have been forced to shut down due to insufficient electricity supply to the mines. This has reduced mine output in South Africa to the lowest level in decades, commented Esposito.
By all accounts, palladium could be in a shortage in 2012 due to the problems in Russia and South Africa. Other mining companies are racing into palladium to take advantage of what should inevitably be a rise in price of the precious metal, believes Esposito. Investors should follow mining companies and look to palladium investing as well.
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Sasha Cekerevac, BA, and Danny Esposito, B. Comm., lead editorial stock analysts at Penny Stock Detectives, in conjunction with stock market guru George Leong, B. Comm., have just updated their breakthrough video, If You Missed Apple, Shame on Us; If You Miss This… which highlights a company these stock analysts believe looks very similar to Apple Inc. in its early days. To see the video, visit: http://www.pennystockdetectives.com/video/pt/index.php?sb=PRESS.