Precious metals
Investing in palladium
Palladium is the smallest and most erratic precious metal. Almost all demand comes from one application — petrol-engine catalytic converters — and supply comes from just two countries.
One use, two producers
About 80 per cent of demand sits in autocatalysts; the rest is electronics, dentistry and chemical catalysis. Russia and South Africa supply roughly three quarters of mine output, mostly as a by-product of nickel or platinum, so supply barely responds to price.
A strike, a smelter outage or a sanctions package can flip the market from surplus to deficit within days.
Substitution with platinum
The two metals are largely interchangeable in petrol catalysts. Years of palladium trading at a premium pushed carmakers to design platinum back in — a slow but sticky shift, since a catalyst recipe stays in production for years.
Electrification as structural headwind
Battery-electric cars need no catalyst at all, while hybrids often carry heavier loadings. Growing recycling from scrapped vehicles caps rallies further.
How to invest
Physical bars and coins exist but the market is thin, spreads are wide and VAT applies. A physically backed ETC is more liquid, yet volumes are a fraction of gold's. Treat palladium as a small tactical position, not a core holding.
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Frequently asked questions
Why is palladium so volatile?
One application dominates demand and two countries dominate supply, so small disruptions move the price hard.
Is palladium an inflation hedge?
No. It tracks the car industry and supply politics rather than the monetary cycle.
Is there VAT on physical palladium?
Yes. Only investment gold is VAT-exempt in the EU.
Will EVs kill demand?
Demand shrinks structurally, but hybrids and recycling stretch the transition over years.