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PALL: The Palladium Premium Over Platinum Collapses
Palladium's bull market peaked in March 2022 at $3,380.50 per ounce, coinciding with Russia's invasion of Ukraine. Russia and South Africa are the leading producers of palladium, causing supply concerns due to the war in Ukraine. Palladium prices have dropped below $1,000 per ounce in November 2023, creating a potential buying opportunity for abrdn Physical Palladium Shares ETF.
PALL: Blessing Turn Into A Curse
Palladium has been the worst-performing precious metal in the past few years due to declining demand in automotive applications. Auto accounts for 80-85% of palladium demand. Palladium is usually produced as a byproduct of mining other metals like silver and copper. Supply is price-inelastic. This was a blessing when demand exceeded supply, leading to squeezes. However, in the coming years as palladium for catalytic converters is phased out, the blessing will turn into a curse as supply of palladium will not decrease with lower prices.
PALL: Strong Fundamentals For Growth Remain Intact
abrdn Physical Palladium Shares ETF allows investors to track the dynamics of palladium without going into the precious metal. Palladium has a strong underlying demand from the automotive sector due to the tightening emission standards. Despite the recovery in vehicle registrations, I would rather Hold the shares of PALL, as the economic slowdown is weighing on industrial metals demand.
PALL And Palladium's Inflection Point
PALL has continued to bleed since we published our constructive thesis on February 15. Speculators have established a record net short position in palladium on Nymex, indicative of an excessively bearish sentiment. If potential supply constraints from Russia materialize later this year, a significant short-squeeze could ensue, pushing palladium prices and PALL up.
Top-Performing ETFs: Commodities ETFs Lead
In this edition of the top-performing ETFs rundown, metals and commodities ETFs both took leading positions. Specifically, those metals and commodities appear related to the ongoing global transition to renewable energy sources.
Palladium Overdue For A Large Rebound: Buy PALL
Palladium and the abrdn Physical Palladium Shares ETF are oversold, presenting a contrarian investment opportunity, as above-ground inventories remain low. Bearish market sentiment stems from a belief electric vehicle demand will erode palladium buying, while many automakers are already switching to cheaper platinum for catalytic converters. A record net short position in palladium futures could lead to a short squeeze and potentially sharp price increase.
PALL: Palladium May Be In Terminal Decline
I advise against investing in Palladium and the abrdn Physical Palladium Shares ETF due to the rapid adoption of electric vehicles, which do not require catalytic converters - a major use for Palladium. Despite historically outperforming gold, I predict a decline in demand for Palladium as the sale of internal combustion engine vehicles decreases, putting pressure on Palladium prices. I suggest investors looking to invest in precious metals as a store of value should stick to gold bullion, which does not face the same demand issues as Palladium and Platinum.
PALL: Palladium Finds A Bottom
PALL: Palladium Finds A Bottom.
ALPS' Biotech ETF SBIO Week's Top Performer
In a somewhat surprising turn, biotech and life sciences-focused ETFs were the driving themes in the last week's top-performing ETFs, with the ALPS Medical Breakthroughs ETF (SBIO) leading the way with a 10% return.
CFTC Data Shows The Largest Speculative Palladium Short On Record
Latest CFTC Data shows the largest net speculative short position on record. Current data is a month behind, and we expect it to be even larger.