Between palladium and platinum, which precious metal is better? We will address that question in this article. We will also go through the pros and cons of both precious metals, their characteristics, and how they differ from each other.
Palladium is a type of precious metal that has a silvery and white appearance. The metal belongs to the Platinum Group Metals and was first discovered in 1803. Palladium was initially used in Jewelry industries and is now largely used in the automotive industry and electronics industry.
Platinum is the most common precious metal and is used to make wedding bands. Like palladium, platinum is also part of the Platinum group of metals and has been used for different purposes for centuries. Platinum is a harder metal than palladium, which is why platinum wedding bands are sturdy and durable.
Density: Platinum is stronger and denser than palladium. It is also resistant to corrosive materials and rust.
Price: Historically, the platinum market has been bigger than the palladium market, however, recently, palladium prices have surpassed platinum prices.
Due to their unique chemical makeup, both platinum and palladium are almost exclusively used in the industrial sector, particularly to make catalytic converters. However, the % of platinum and palladium used in the industrial sector varies annually, but the vast majority of the precious metals are used in the industrial sector.
Only about 2.5 % of platinum and palladium goes towards investment. Investment demand for both ETF holdings and bullion has been declining for several years. The prices of platinum and palladium respond to supply and demand forces.
Since the investment in precious metals is small, it can influence their prices if the demand goes upwards or downwards. Generally, the investment demand for PGMs is very small.
Investors' biggest obstacles are a recession and stock market crashes. Since 1970, the United States has faced seven recessions, and the platinum price has suffered during the recession periods.
Investors are aware that the majority of platinum is used in the auto industry, so if the size of the economy is shrinking and the platinum supply is falling, the price and demand for the precious metal will drop automatically, and it will suffer from supply shortages.
On the other hand, the price of palladium also suffered during the recession periods, only rising modestly in one recession. This shows that in a recession, palladium is a weak asset, unlike gold, which is a safe asset.
There are three factors that move the price of palladium and platinum:
Demand for JewelryAutomobile industryInvestment demandThese factors determine the price of palladium and platinum. This means when sales of vehicles increase, the price for both metals decreases. However, the difference between platinum and palladium is that palladium is more reliant on its industrial use.
Your risk tolerance will decide your choice. The spot price of palladium is more volatile than platinum's spot price, and while palladium can outperform platinum in bullish markets, it can underperform in bearish markets. Learn more about investing in these precious metals here at Focus on the User.
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