A New King Metal – Again

Move over gold and platinum – palladium is back. During the first week of December, the value of palladium surpassed gold. Last year, the U.S. Mint issued a palladium bullion coin (styled after the Mercury Dime) and while some scratched their heads as to how this relatively unknown metal has become the most valuable precious metal, the truth is, it’s not the first time. The three metals – gold, platinum, and palladium have vied for the top spot for quite a while.

While throughout antiquity gold traditionally held the top spot, at the turn of the last century the price of platinum surpassed gold. In 1901, the price of platinum reached parity with gold (approximately $20 per ounce) and by the close of the decade, was valued at $32 per ounce. By the end of the 1920s, platinum had peaked at just over $100 per ounce before falling back to the $30 range during the Depression. After World War II, the price of platinum steadily climbed, reaching a peak just shy of $2,300 in early March 2008. It’s been a roller coaster ride for platinum since then, falling sharply in the last half of 2008, recovering some from 2009-2011 before heading south to its present value of around $800. Throughout most of the 20th century though, platinum traded at a premium to gold which explains the "Platinum level" sitting above the "Gold" in reward schemes such as credit cards and frequent flyer programs.

Suddenly in the late 1990s, came palladium. It began a meteoric rise in early 1997 and for the next four years, went nowhere but up, cresting at over $1000 in late January 2001 – well above the price of platinum and gold combined! As fast as it soared, it collapsed, falling to $330 in November of that year. By the spring of 2003, it was a lowly $155. Starting in 2009, palladium began another long rally, which while not exactly uninterrupted, has carried it to its present place atop the metals markets at roughly $1,275. This rally is largely attributed to the metal being used as a substitute for platinum in catalytic converters, though with the present pricing disparity, one wonders how long this will continue. In the long run, as electric vehicles supplant internal combustion models, the outlook for both platinum and palladium is uncertain.

So while much is made of palladium’s recent taking of the crown, it’s not the first time, and if anything is certain, it’s that there will be another pecking order within a few years.