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Palladium ETF Launches, Finally (NYSE: PALL)

Written By Brian Hicks

Posted January 11, 2010

Palladium has trounced other precious metals over the past year. This 200 day chart shows the period when palladium really broke from the pack:


New Palladium ETF

Back when I recommended palladium to Wealth Daily readers on Nov 2nd 2009, I suggested physical bullion as the best way to play it. That was partly due to lack of an ETF option. 

Well now there is one. It just launched last Friday (1/8/09), and it’s backed by physical palladium. It trades on the NYSE under PALL.

The expense ratio is reasonable at .60%. With the premium on palladium bullion high, this new ETF should offer investors a good way to play the rare metal.

Palladium is trading at $430 per ounce today. Here was my bull-case for palladium back in November, when it traded at $320 (also recommended it on my old blog in April, at $250):

I would classify it among the riskier metals as an investment class, but the potential upside is great. As the world continues to print money in an attempt to stimulate economies, palladium could benefit from both increased industrial demand and inflation.

The decline in car sales is partially to blame for the fall in palladium prices. But with governments artificially stimulating auto-sales around the globe, palladium prices should rebound with demand.

I also mentioned Stillwater Mining (NYSE: SWC) as a way to play the metal. That stock is up 99% since.

Palladium has had a fantastic run over the last year. It would probably be prudent to wait for a pullback at this point. That said — I’m not selling mine yet. I’m also not adding any more for now.

Palladium Stocks

Since most of the world’s palladium comes from South Africa and Russia, investing in palladium stocks can be a bit tricky. There are just a handful of large North American palladium producers including Stillwater and North American Palladium (AMEX: NAP)

There are a few smaller companies exploring and developing similar nickel-copper-platinum-palladium projects — including one that my colleague Luke Burgess is particularly excited about…

It’s a junior exploration and development mineral company with over 100,000 hectares, and it’s located smack-dab in between the two largest palladium deposits in North America.

To the west is North American Palladium’s Lac des Iles Mine, one of the largest palladium mines in North America. Lac des Iles has 3.7 million ounces of palladium resources and is projected to produce 140,000 ounces next year.

To the east is Marathon PGM’s Marathon Mine — containing 2.4 million ounces of palladium reserves plus 3.0 million ounces of palladium resources. It was just bought by Stillwater Mining (NYSW: SWC) for $118 million.

Take a look for yourself:

September 2010 Great Lake Map 600x308

These are two of the most important palladium mines in North America.

Every junior palladium explorer wants land around them.

This junior company has already made the discovery of a palladium deposit on one of its many mining claims of 730,000 ounces of palladium-equivalent resources…

But the company is actively working to upgrade and increase its palladium resource base.

The target: 2.6 million ounces of palladium-equivalent resources.

And it’s worth 12.6 times more than the company’s current market cap.

This means that — once this company becomes resource-heavy and properly valued — share prices could increase 1,163%.

And that’s just at current palladium prices!

The last time palladium was entering a similar bull market, prices rapidly surged from $160 to over $1,100 an ounce — a 588% increase!

Fortunately, palladium prices have pulled back quite a bit, allowing for a buying opportunity. And if we have a similar bull market for palladium, prices could hit $3,438 an ounce!

With palladium prices nearing $3,500 an ounce, the investment gains from this small stock will start to increase exponentially…

I’ve already taken up too much time here. There’s a lot more to this story that I want you to hear.

I haven’t even begun to touch on how palladium prices are about to be forced higher by the global auto industry’s “big switch.”

But you can learn more about the global palladium industry and how the auto industry’s “big switch” will drive prices even higher simply clicking here or copying and pasting the following link into your internet browser’s address bar:

Good Investing,

Adam Sharp
Editor, Wealth Daily