Palladium may not be as popular as gold, silver or platinum, but it's comparably valuable and quickly gaining favor among investors. One of the easiest and most cost-effective ways to invest in this precious metal is to buy palladium bars. The following is an overview of palladium bars that can help you decide if they're the right investment option for you.
What Is a Palladium Bar?
A palladium bar refers to a bullion bar that contains 99.95% fine palladium. It comes in a variety of weights, ranging from 1 ounce to 100 ounces. The value of a palladium bar is mostly dependent on the spot price of palladium.
Palladium is a precious metal that belongs to the platinum group. It resembles platinum with its silver-white appearance, but it's less dense and has a lower melting point than silver. It's a useful metal with a wide range of applications, most notably in the production of catalytic converters that function to reduce harmful emissions in automobiles. Palladium is mainly produced in Russia and South Africa, two countries with geopolitical instability that occasionally threatens the supply of this precious metal.
Why Would I Buy a Palladium Bar?
Palladium bars offer many benefits over other forms of precious metal investments. Below is a list of reasons why you should consider incorporating them into your investment portfolio:
- Own a tangible asset: A palladium bar is something that you can hold in your hand. Unlike other types of investments, it doesn't need to be managed or made whole through a contract. It's just a personal possession with monetary value.
- Diversify your investments: Buying palladium bars is a great way to help reduce your investment risk. By diversifying your portfolio, it can protect you from a financial wipeout in the event of a stock market crash or severe economic depression.
- Hedge against inflation: The purchasing power of the dollar is likely to fall over time, but palladium and other precious metals rarely follow suit. As such, owning palladium bars can be an effective way to protect yourself against inflation.
- Pay lower markups: Purchasing palladium bars is often the least expensive way to invest in palladium bullion. Palladium coins typically come with higher mark-ups because they require more labor and machining to make.
What Properties and Characteristics Should I Care About With Palladium Bars?
Since real palladium bars cost large sums of money, it's essential that you take the necessary precautions to make sure they're authentic before buying them.
You should only purchase palladium bars that are produced in reputable precious metal refineries. Each of these bars carries a stamp of authenticity that shows its place of origin, purity and weight. In some cases, they may feature an image or motifs that further verify that they came from specific refineries. If you intend to buy palladium bars from one particular refinery, do some research to get a good idea of how they look on both sides. This can help you identify authentic bars when you see them.
What Special Terms Do I Need to Know About Palladium Bars?
When you're shopping for palladium bars, you'll likely come across certain terms that you may not be familiar with. Learn these common terms so that you can make more informed investment decisions. Below is a list of commonly used terms in the bullion investing world:
- Assay: This is a test conducted to determine the weight and fineness of a palladium bar.
- Correction: A correction is when a fall in prices follows a rise in the market.
- Fineness: This refers to the purity of a palladium bar expressed in 1,000 parts of its alloy.
- Good delivery: These are the specifications that a palladium bar must meet before it's regarded as acceptable for delivery.
- Hallmark: A stamp or mark is placed on a palladium bar to identify the producer and verify its authenticity.
- Liquidity: Like other tangible assets, this refers to the ease at which a palladium bar can be converted into cash.
- Market value: This is the current trading price of a palladium bar.
- Spot: This term refers to the cost of the physical delivery of palladium bars.
- Troy ounce: This is the unit of weight for palladium and other precious metals. 1 troy ounce is equal to approximately 31.1035 grams.
Why Buy Palladium?
There are many reasons to buy palladium in addition to or over other precious metals. The following is a list of compelling reasons to invest in palladium:
- Rising demand for automobiles: Approximately 85% of palladium has been used to produce catalytic converters in vehicle exhausts, making the automotive industry the biggest buyer of this precious metal. Therefore, palladium is expected to experience growth in the future because of the projected increase in global demand for automobiles and those with fewer emissions. While automakers in the United States and China the two largest auto markets in the world use palladium as an ingredient in catalytic converters for most cars and small trucks, many European vehicles use platinum instead of palladium.
- Limited palladium supply: Palladium is one of the scarcest precious metals. Its declining supply has led to an exponential increase in its price . Both Russia and South Africa, which together account for more than 85% of total palladium production, are showing signs that they're experiencing a decline in output. This means the shortage of palladium will likely continue into at least the near future and result in a price spike.
- Rising price: As a result of rising demand and slumping supply, the price of palladium has risen steadily over the past decade or so. In 2019, the metal went up more than 38%, which is more than double the gains of gold and silver. 
With its impressive performance in recent years, palladium is now the rising star of the precious metal family. Buying palladium bars is the most straightforward way to capitalize on the metal's big promise.
1. Mining Technology. 'Growing demand and uncertain futures: the rise of palladium,' https://www.mining-technology.com/features/growing-demand-and-uncertain-futures-the-rise-of-palladium. Accessed September 30, 2020.
2. DAILYFX. 'Palladium Vastly Outperformed Gold Prices in 2019. Is it Topping?,' https://www.dailyfx.com/forex/fundamental/article/special_report/2019/10/24/Palladium-Vastly-Outperformed-Gold-Prices-in-2019.-Is-it-Topping.html. Accessed September 30, 2020.