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A year ago, I wrote a piece titled
"The Case for Palladium".
At that time I made a case that palladium prices, at 194, were extremely
undervalued. Since that time, we have seen the price of Palladium move to
over $400/ounce, before dropping $90 from its high. Currently, Palladium is
trading at $312/ounce. At this point, I believe Palladium prices are again
extremely undervalued.
If you did not read my article, I urge
you to read my above mentioned article. The fundamental reasons behind owning
palladium still remain the same. If anything, the past year has only
reaffirmed those reasons.
Pollution and Palladium
One of my clients recently returned from
China, after living in the
United States
for the past 15 years. I spent a good amount of time talking to her about her
experience and thoughts about the transformation that has taken place over
the past decade and a half. Although she is not an economist, I often find
that your average person has the best and unbiased insights. The first point
she made was that the pollution was unbearable.
Of course, this makes sense. In the past
decade and a half, China
has focused on economic growth, industrialization, and the subsequent
expansion of cities. With the expansion of cities and industrialization, you
can expect subsequent pollution. In fact, the pollution is so drastic that
the World Bank has reported that China has 16 of the top 20 most
polluted cities in the world.
Because of this increased pollution, China has
embarked on a crusade to clean up emissions. In recent months, a new
environmental initiative was passed that would require the reporting of
energy consumptions and emissions every six months. One of their main goals
is to reduce energy pollutants by 10 % in the next 5 years.
So what does this mean for Palladium? Well,
as I mentioned in my previous article, Palladium is mainly used in
autocatalytic converters. It is also still substantially cheaper than its
platinum counterpart.
Over the last several years, one of the
major causes of pollution in China
has been the increase of cars on the roads. The China Association of
Automobile Manufacturers reported that there were 50% more cars sold in the
first half of this year than there were last year. One can only imagine that
with the continued growth of the Chinese consumer, the demand for cars will
only rise. Subsequently, the demand for a cheap industrial metal alternative
will likely also rise.
If you are interested in learning more about the
commodity bull market, I urge to pre-order my forthcoming book, "Commodities for Every
Portfolio: How To Profit from the Long-Term Commodity Boom".
Emanuel Balarie
Senior Market Strategist
Wisdom Financial, Inc.
Direct toll free: 866-465-0017
International: 949-548-2021
Emanuel Balarie is the Senior Market Strategist at Wisdom Financial.
As an expert on foreign markets, foreign currencies, and the precious metals
industry, Mr. Balarie often speaks at public
engagements and his research is regularly published in investment
newsletters. You can find out more about Mr. Balarie
and his services at www.wisdomfinancilinc.com
The risk
of loss in trading commodity futures contracts can be substantial. You should
therefore carefully consider whether such trading is suitable for you in light
of your financial condition.
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