Palladium Investors Face Wild Cards

October 03, 2014

What's up with palladium? Above-ground stocks are high, the South African miners' strike had no significant impact on the metal's price, Norilsk Nickel is still producing and yet the metal's price skyrocketed at the end of August.

Palladium was all over the news at the end of August and beginning of September. The $900-an-ounce level had been breached and the metal was hitting highs not seen since 2001, some 13 ½ years before. Were these levels going to be maintained?

While since then the price of the metal may have fallen back down to somewhere around the $820 mark (May/June levels), it's still worth taking a look at this member of the platinum group metals (PGM) and just why it's important.

The ETFS Physical Palladium ETF (PALL | A-100) is the only ETF in the market today to focus exclusively on palladium, although it’s not the only exchange-traded wrapper to offer some sort of access to this market.

PALL tracks the palladium spot price minus holding costs by owning palladium bullion that’s held in vaults in London and Zurich. Since it has come to market in January 2010, the fund has attracted a net of $454 million in total assets. But so far in 2014, PALL has actually bled more than $100 million in net assets despite what has been a solid run-up in performance.

Year-to-date, PALL has tacked on gains on 8.7 percent—outpacing gains in other precious markets such as gold, and in the U.S. stock market as well, as measure by the SPDR S&P 500 (SPY | A-100).


Chart courtesy of

Other ETFs that offer some exposure to palladium include two other funds from ETF Securities, including the $24 million ETFS Physical WM Basket (WITE |B-47), which allocates about 16 percent to the metal, as well as the $160 million ETFS Physical Precious Metals Basket (GLTR | A-38), in which palladium represents about 7 percent of the portfolio.

Beyond those, the RBS Rogers Enhanced Precious Metals ETN (RGRP | C-77) also allocates about 15 percent of its portfolio to palladium, although RGRP gets its exposure through the futures market. The nearly two-year-old fund has only $3 million in assets.



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