Palladium investment is gaining popularity as investors seek precious metal options beyond gold and silver. That’s in part because alternative investments, such as precious metals, can provide portfolio diversification and the potential for returns. Though there are significant risks to be aware of, too.
Palladium investing may be attractive to some investors due to its relative rarity and affordability compared to gold, and it’s fairly easy to buy and sell. But it’s important to understand how this asset class works before diving in. Let’s look at how to invest in palladium and the pros and cons of holding precious metals in a portfolio.
Key Points
• Palladium prices are influenced by supply and demand, with major production in Russia and Africa.
• Significant demand for palladium comes from the automotive industry, especially for catalytic converters.
• Major companies in the palladium industry include Norilsk Nickel, Anglo American Platinum, and Sibanye-Stillwater.
• Investment options in palladium include physical bars, coins, ETFs, futures, and shares in mining companies.
• Investing in palladium offers diversification and inflation protection but involves storage costs, price volatility, and liquidity risks.
What Is Palladium?
Palladium is a silvery-white element that assumes a solid form at room temperature but can be heated to a liquid state. Part of the platinum group of metals, palladium was first discovered in 1803 by William Hyde Wollaston, an English chemist. It was named after the asteroid Pallas, which was discovered around the same time.1
Common uses for palladium include:
• Watch springs
• Surgical instruments
• Dental fillings and crowns
• Electrical contacts
• Catalytic converters
Palladium can also be used to make jewelry and forms white gold when alloyed with gold.
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The Palladium Market
Interest in palladium investments has grown in recent years as demand for it remains steady.
Supply and Demand Dynamics
Supply and demand can influence pricing for any good, including palladium and other precious metals. Palladium’s relative scarcity influences the supply side, while demand is determined by the market. Several factors affect the availability of palladium and demand for it, including:
• Production. In its pure form, palladium is most often found in Russia and Africa, with smaller concentrations in Australia, Canada, the U.S., and Finland. Slowdowns in production can affect supply and in turn, drive up prices if demand remains high.2
• Recycling. Recycling can re-introduce palladium into the supply. When recycling increases, the supply can increase to help meet demand and keep prices stable.
The largest demand for palladium comes from the automobile industry, according to the World Platinum Investment Council (WIPC). An uptick in global vehicle production in 2023, in particular, sparked a surge in demand for palladium which led to a supply deficit. However, that deficit is on track to become a surplus by 2026 thanks to recycling, according to the WIPC.3
Key Players in the Palladium Industry
Several companies operate in the palladium market, though one claims the title as the largest producer. Norilsk Nickel (Nornickel) is a global leader in palladium production and mining. It holds the largest position for palladium and nickel production in the world market and is also a key producer of platinum, rhodium, and copper.4
Other top palladium producers include:
• Anglo American
• Platinum, LTD.
• Sibanye-Stillwater
• Impala Platinum Holdings, LTD.
• Vale
These companies mine palladium along with other platinum group metals, though on a smaller scale than Nornickel.
Investment Options for Palladium
Investing in precious metals like palladium is not one-size-fits-all and there are several ways to do it. The most common ways to own palladium as an investment include:
• Buying and selling palladium bars
• Trading palladium coins
• Investing in palladium exchange-traded funds (ETFs)
• Trading palladium futures
The first two options may be preferable if you’d rather make a tangible investment in precious metals. Palladium bars or coins are relatively easy to buy, though they do require proper storage to preserve the metal’s integrity.
Palladium ETFs offer exposure to a basket of investments in a single vehicle, without requiring any type of physical holding. Palladium futures, meanwhile, are speculative investments that can offer higher returns but carry more risk.
Factors Influencing Palladium Prices
Palladium prices can fluctuate based on a variety of factors, starting with supply and demand. When supply shrinks and demand increases, that can result in a higher price. As of January 23, 2025, the price was around $1,000. That’s significantly below the average closing price of $2,388.36 registered in 2021.9
Supply and demand can, in turn, be affected by factors that affect palladium pricing. Geopolitical events that disrupt production in countries where palladium mining has a sizable footprint, for instance, can send prices soaring if there’s a significant reduction in available supply.
The global economy also plays a part. If the global economy is strong overall, that can lead to more demand for palladium and potentially higher prices. When the global economy begins to slow, on the other hand, prices may fall if demand declines.
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Advantages of Investing in Palladium
Palladium and precious metals in general can offer some advantages to investors. Here are some of the best reasons to consider palladium investment.
• Diversification. Alt investments like palladium can add a degree of diversification to your portfolio.
• Accessibility. Some alternative investments, like classic cars, often have a higher barrier to entry. Investing in palladium, by contrast, is relatively easy and there are multiple ways to do it.
• Inflationary protection. Palladium and precious metals are considered to be an inflationary hedge, which can help protect your purchasing power if consumer prices rise.
You can even use palladium to fund your retirement through a self-directed IRA. Along with gold, silver, and platinum, it’s one of four precious metal investments the IRS allows with these tax-advantaged accounts.
Risks Associated With Palladium Investment
Palladium investing is not risk-free and it’s important to consider the potential downsides before adding precious metals to your portfolio. Here are some of the most significant risks associated with owning palladium as an investment.
• Storage costs. If you’re buying palladium bars or coins you’ll need to store them properly, which may require an additional investment of both time and money.
• Pricing volatility. Palladium pricing is highly sensitive and a change in market conditions or a geopolitical event could result in a substantial shift overnight.
• Liquidity. Precious metals are liquid assets since they can easily be sold for cash, but the price you get may be below your expectations depending on the timing of the transaction and the overall condition of the market.
The initial investment for palladium bars or coins is also a consideration. If you have $1,000 to invest you’d have to consider carefully whether you’d rather use that to buy one palladium bar, or invest in 10 shares of a palladium ETF that’s trading for $100.
💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.
How to Buy and Store Physical Palladium
If you want to invest in physical palladium you can purchase bars or coins from a reputable dealer. You may buy palladium through a local bullion dealer that sells palladium bars and coins, or from an online company.
The advantage of buying locally is being able to physically see what you’re buying before you make a purchase. You can ask questions and should you decide to buy, walk away with your bars or coins in hand without paying a shipping fee. If you plan to sell your bars or coins, you could take them back to the same dealer to get an offer.
With an online dealer, you’re limited to reading descriptions and viewing pictures of the coins or bars you plan to buy. Once you’re ready to invest, you’ll have to arrange to send payment and pay shipping costs to transport your bars or coins to you.
When it’s time to store your coins or bars you may choose to do so at home or in a safe deposit box at your bank. If you store your palladium at home you may want to invest in a specially-made box that’s designed to hold precious metals and keep it inside a fireproof safe.
Should you go the bank route, note that safe deposit boxes and their contents are not FDIC-insured.
Palladium ETFs and Mutual Funds
Palladium ETFs and mutual funds offer exposure to palladium and precious metals investments in a single basket. Exchange-traded funds trade on an exchange like stocks while mutual funds settle once per day.
If you’re considering a palladium ETF, look at the underlying investments to know what you’ll own. For example, Aberdeen Physical Palladium Shares ETF (PALL) holds palladium bars in a secure vault so you can own physical precious metals indirectly. Other palladium ETFs, meanwhile, may invest in palladium mining companies instead.
Aside from holdings, consider the expense ratio, which is the price you’ll pay annually to own a palladium ETF or mutual fund. Also, look at the fund’s history to see how its price and return profile have trended over the years. Just remember that past history is not an indicator of future performance.
Investing in Palladium Mining Companies
If you’re comfortable trading individual stocks you might trade shares of palladium mining companies. Trading stocks versus investing through an ETF or mutual fund has pros and cons.
You’ll need to decide how much to invest and which companies to invest in, based on their performance outlook, risk profile, and share price. You’ll also need to have a strategy for holding those stocks. Ask yourself:
• How long will you hold the shares?
• What are the tax implications of selling those shares at a gain?
• How much of your total portfolio will you allocate to palladium and/or other precious metals?
You’ll need a brokerage account to buy and sell stock shares online but it’s relatively easy to get started. The first step is finding a brokerage that offers access to palladium stocks or futures. From there, you’ll just need to set up an account to start investing.
Palladium vs. Other Precious Metals
Palladium has one notable characteristic working in its favor compared to other precious metals. It’s much rarer than gold or silver, which can potentially drive up the price through imbalances in supply and demand.
The downside, however, is that palladium prices tend to be more volatile than gold or silver prices. That means you’re trading off a certain amount of stability and taking more risk with palladium investments.
Liquidity is also a concern, as gold and silver investments may be easier to sell on the fly. Palladium, though gaining ground as an investment, is still a relatively new player compared to gold and silver. Investors who are looking to buy precious metals may bypass palladium for investments they perceive as being more price-stable.
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The Takeaway
Investing in palladium may be new territory for you and if it is, it’s important to do your research beforehand. Specifically, you should have a good understanding of what can affect palladium prices and how its risk/reward profile aligns with your risk tolerance.
If you’re brand-new to online investing, consider looking for a brokerage that charges minimal fees and offers an easy, online account setup. The sooner you start investing, the sooner you can get on track with your financial goals. In the meantime, check out our guide to alternative investments to learn more about building a portfolio with precious metals.
Ready to expand your portfolio's growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi's easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it's important to consider your portfolio goals and risk tolerance to determine if they're right for you.
FAQ
What industries drive the demand for palladium?
The automotive industry is the biggest demand driver for palladium, according to the WPIC. Vehicle manufacturers use palladium to make catalytic converters which help power cars and trucks.
How does palladium compare to other precious metals as an investment?
Palladium has a higher scarcity factor than gold, silver, and other precious metals. When supply is low relative to demand, prices may soar. The biggest risk with palladium investments, however, is price volatility. That’s something to consider if you’re debating how to invest in gold vs. palladium or other precious metals.
What are the ways to invest in palladium?
You have several possibilities for owning palladium as an investment. You might choose to buy palladium bars or coins and store them, or you could invest online with palladium ETFs or mutual funds. Trading individual shares of palladium mining companies is also an option.
Photo credit: iStock/Delmaine Donson
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