“With regards Palladium, I remember bringing this up at the Global World money show in London a few weeks ago and you, like many investors, did not appear to see the difference between it say and Platinum. Even with the South African strikes, Platinum may end up in surplus this year. Palladium is completely different. The Russian stockpile which used to supply up to 40% of the market is now depleted. Although car sales in Europe have fallen off a cliff, if you add total car sales for Europe, US and China, the monthly sales are the highest ever and increasing. Palladium is the metal of choice in catalytic converters petrol cars which is the vast majority of Chinese and 'emerging' market cars (around 4g needed per car). And globally, all economies are experiencing increased pollution emission controls (Brazil is next to move up the Euro emission control levels, China in 2014).

“Next year you could see a deficit in excess of 1.5M oz in a market where supply (incl recycling) is 9.5M. A big pickup in ETF demand could push deficit close to 2M oz potentially. This is big % of total supply and this is why Palladium is doing well now and should continue to outperform. It is estimated the deficit will remain for at least 5 years. For some reason, no investor I meet has picked up on this”

Eoin Treacy's view Thank you for this informative email and your participation in my talk at the World Money Show last month. The Excel sheet you provided with supply and demand estimates may also be of interest to subscribers.

Palladium and platinum share the characteristic of being dependent on one country (Russia and South Africa respectively) for the majority of global supply. The metals are interchangeable in catalytic converters so the ratio of their prices does have an impact on demand.

Palladium has rallied impressively over the last six consecutive weeks to test the upper side of the 15-month range. This represents the first area of potential resistance and a sustained move above $700 will be required to confirm a return to medium-term demand dominance.

Platinum also remains in a more than yearlong range and has lagged somewhat since October. A sustained move below $1580 would be required to begin to question current scope for continued higher to lateral ranging.