History of Palladium

Palladium is part of the platinum group metals. Despite being worked with some skill by South American Indians over 1,000 years ago it was not until the Spanish conquest of the New World, during the fifteenth and sixteenth centuries, that news reached Europe of a new white metal with unusual properties. The Spanish however first considered the metal a nuisance because it interfered with their gold mining activities. In its natural state, Palladium is found as part of the platinum group metals, but despite its extraordinary properties this metal did not interest European scientists as the substance could not “melt by fire or by any of the Spanish arts.” It is heavier than gold and virtually impossible to corrode with gases or chemicals. It took nearly two centuries for palladium’s significance to be recognized, separate from platinum.

From the Greek name “Pallas”, goddess of wisdom, Palladium was discovered by the British chemist William Hyde Wollaston in 1804. In the auto catalyst industry, palladium is currently a lower-cost substitute for the more expensive alternative, platinum. It is also an essential component of the jewellery industry being one of the three most used metals (along with nickel and silver) that can be alloyed with gold to produce "white gold." It is also used in dentistry, watch making, and in the production of surgical instruments and electrical contacts.

Palladium presently sells for substantially less than the price of platinum, but that has not always been the case. In late 2000 and early 2001, for example, due to supply disruptions and a resulting panic by auto manufacturers (most notably, Ford Motor Co.), the price of palladium reached an all-time high of nearly $1,100 US per ounce, approximately the same price as platinum at the time. Over half of the world’s annual supply of palladium comes from Russia and the amount and status of Russian palladium supplies are state secrets. In the past, Russia has routinely withheld supplies of palladium from world markets for its own political and/or economic gain, resulting in very large and very fast fluctuations in palladium prices. It is this large historical range of price, and the price differential between palladium and platinum at any given time that gives palladium its attractive investment potential.

The price of palladium has been, and could again be, extremely volatile, providing investors with a significant opportunity for speculative profit particularly given that palladium is 30 times rarer than gold.