Rising Price Trend

This Precious Metal Could Rise 125% Over the Next 10 Months

At The Real Asset Company we seem to have been talking a lot about the gold price and investing in gold recently. However its worth turning our attention back to another precious metal we’re big fans of – palladium. Demand for this metal is far outstripping supply, and this situation is getting worse. Which is no bad thing for the palladium price. Below, the author demonstrates just how beneficial palladium investment can be.

You’ve probably never considered this precious metal before. But you should today…

The last time a trade like this set up, investors walked away with a double in just 10 months. And every similar trade in the last seven years was a winner.

Here’s the story…

We love “contrarian” investing ideas. The more an investment idea is hated, the more we’re ready to step up and buy. At the point of maximum pessimism, there probably aren’t many people left to sell… and just a little bit of buying interest can turn things around.

That’s exactly what’s happening in “the precious metal you’ve never considered.”

The chart below shows the price of this precious metal (in black) versus how many large speculators are making bullish bets on the metal through commodity futures (in blue). The lower the blue line, the more hated it is…

 

In short, traders hate this precious metal right now. The last time it was this hated was March 2009. Back then, the price increased 125% in just 10 months.

Looking farther back, to 2005, traders have only been this pessimistic four other times. Each of those times marked the start of a great nine-month trade. If you had bought this precious metal each time, on average, you would have made 62%. Every trade was a winner.

With traders this pessimistic, I think it’s a great time to buy… especially because there’s a big long-term “tailwind” behind this trade…

You see, this precious metal is in big demand by industries, especially carmakers. It’s used in practically every gas-powered car you see on the road. And as of now, there is no viable substitute.

Over the next decade, worldwide vehicle demand is going to explode. Right now, India only has 12 cars per 1,000 people. China only has 28. The U.S. has 451. As the world “catches up” to the U.S., carmakers will need more of this precious metal to keep pace.

In 2011, the world’s supply of this precious metal was 7.42 million ounces. But demand was over 1.5 million ounces more (8.89 million ounces, to be exact). Recycled scrap makes up the difference for now. But as demand increases over the next decade, supply will have a hard time keeping up.

Supply and demand are Economics 101. When demand is greater than supply, prices will rise. I don’t expect it to be different with this precious metal…

I’m talking about palladium. It’s a “sister metal” to platinum.You can invest in palladium through physical bullion.

Based on supply and demand, palladium prices could go up by hundreds of percent in the long term. In the short term, we should see double-digit returns this year alone.

Even if you’ve never considered an investment in palladium before, you should now…

Please Note: Information published here is provided to aid your thinking and investment decisions, not lead them. You should independently decide the best place for your money, and any investment decision you make is done so at your own risk. Data included here within may already be out of date.

About the Author

Jan SkoylesJan Skoyles is Head of Research at The Real Asset Company, a platform for secure and efficient gold investment. Jan first became interested in precious metals and sound money when she met Ned Naylor-Leyland whilst working alongside him in the summer of 2010. Jan then went on to write her undergraduate dissertation on the use of precious metals in the monetary system. After graduating from Aston University in 2011 Jan joined The Real Asset Co research desk. Her work and views are now featured on a range of media including BBC, Reuters, Wall Street Journal, Mail on Sunday, Forbes and The Telegraph. She has appeared on news channels including Russia Today to discuss the gold price and gold investing. You can keep up with Jan's commentary by subscribing to our RSS feed Gold Investment News.View all posts by Jan Skoyles