Understanding Palladium’s Spot Price

Just like the gold spot price and silver spot price, palladium has a spot price too. This spot price is the cost of one troy ounce of pure palladium at that particular moment. Since this value fluctuates with time, it is an invaluable factor to consider when drawing up a palladium investment plan.

However, this price is very rarely the going rate of an ounce of palladium when you buy a palladium product. Dealers usually charge a premium to the spot price to maintain operating profits. Not only does SD Bullion display the current price of palladium on the market, we also clearly highlight our dealer premium to ensure transparency.

What Affects the Price of Palladium?

Like all other precious metals, palladium prices depend on a variety of factors.

In fact, unlike many popular precious metals that don’t see much industrial use, palladium is an essential cog in the huge wheel that is the automobile industry. It is widely used to reduce noxious fumes from vehicles that run on gasoline.

New industrial uses, higher industry demand, fluctuations in forex prices of countries that supply palladium, trade sanctions on palladium supplying counties, and newer commercial uses are just some of the factors that affect the prices of palladium.

Simply put, the metal’s demand and supply in the market play a key role in its price.

Frequently Asked Questions about Silver Prices

Who sets the palladium spot price?

COMEX, formerly known as Commodity Exchange, is the primary market for trading metals such as gold, silver, copper, palladium, aluminum, and so on. Palladium was originally part of NYMEX (New York Mercantile Exchange). However, NYMEX merged with COMEX in 1994, and is now a division within COMEX.

The spot price determined by COMEX is an indicator of the supply and demand of palladium in the market. Even the exchange doesn’t set palladium prices willy-nilly. The spot price changes constantly based on the price of short-term palladium futures contracts.

Will buying palladium in another country be cheaper?

No. Even though palladium is traded on many global exchanges, palladium spot prices are constant across the globe – with negligible variations here and there. Hence, you will find the same palladium spot price everywhere, irrespective of country.

What currency is used to provide the spot price of palladium?

The US Dollar is the international standard for prices of many precious metals, palladium included. Therefore, all palladium spot prices are in USD. The original USD value of palladium is converted into other currencies before they are traded on local exchanges.

Will a change in spot price after placing an order affect my order total?

No. Once you place an order with SD Bullion, the palladium price is locked in – ensuring that you get the weight you ordered, at the price you ordered – irrespective of market fluctuations after the lock-in.

What are “bid” and “ask” prices? Why are they different?

Put simply, the “bid” price is the price that a dealer uses when you want to sell palladium to the dealer. On the other hand, the “ask” price is the price the dealer uses when selling you palladium. The gap between these prices is called the bid-ask spread and is a great indicator of the liquidity of the precious metals market at any given time.

The larger the gap in the “bid” and “ask” prices, the less liquid the market is, and vice versa. Hence, the best time to liquidate your assets is when there is a very narrow bid-ask gap.

Why are prices per ounce higher than the spot price of palladium?

When it comes to a precious metals product, there are many other costs associated with it. These costs include secure shipping, safe storage, manufacturer costs, dealer premiums, and so on. Even dealers cannot buy palladium at the palladium spot price. To counter the additional costs and maintain profitability, they add a slight premium to the spot price.

Are taxes added to the current palladium prices?

Currently, there is not tax to be paid to SD Bullion when purchasing palladium.

Is Palladium a good/safe investment?

Although all investments come with their share of market risks, investors have learned to identify potential winners by minimizing risks. Let’s take a quick look at palladium.

Russia, South Africa, Canada, and the United States are the chief producers of palladium in the world. All relatively stable countries that should keep up a steady supply of palladium for many years to come.

Any commodity or precious metal that is driven purely by speculation should be seen as a high risk proposition. The higher the number of applications (industrial, commercial, investment, speculative) a precious metal has, the safer the investment it is considered to be.  

Palladium is widely used in the automobile industry – as a catalyst in gasoline-fueled car engines to reduce noxious fumes.

This metal is used to make jewelry, and is used in dental amalgam and photography as well.

Add to this the recent surge of palladium products from mints all over the globe, most notably the Palladium Eagle from the US Mint – and you have a precious metal that is a popular investment option and also has broad commercial and industrial demand.

This ensures that the demand for palladium is not purely fueled by investors and speculators; there is actual practical use for the metal, and is in substantial industrial and commercial demand outside the investor market, which gives it a solidity that many precious metals do not enjoy.

So yes, historically speaking, precious metals like palladium have seen a steady upward trend and it seems to have all the makings of a good investment asset.

Should palladium be a part of my investment portfolio?

It can be prudent that all investments, whether investing the stock markets, precious metals, or any other asset, should be diversified. Although diversification might decrease your net returns, it acts as a solid shield against sudden market shocks.

Similarly, adding palladium to an investment portfolio ensures that you have another base covered and aren’t putting all your eggs in one hypothetical precious metal basket.

Diversifying your precious metals portfolio with metals like palladium is a sensible option because sudden market changes can be brought about by just about anything. A new technology, a new supply source, and so many other factors can bring down the price of any metal rapidly. Hence, it makes sense to distribute your wealth through various investment vehicles.

Palladium is also as good a hedge against inflation as the traditional precious metals investment avenues of gold and silver.  

So, yes. Palladium should ideally be a part of any investment portfolio from the diversification standpoint. Nonetheless, make sure you consult a qualified investment manager or conduct your own research as every investor has unique requirements. 

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