Is Palladium More Expensive Than Gold?

Posted on February 15, 2021

Palladium and gold are two of the most precious metals on the planet. Whether you're an investor or collector, you might wonder which metal is the most expensive to determine the best options for you. Here, we explore whether palladium is more expensive than gold and the predictions for their future values.

Palladium Price Trends and Trends in Applications

Palladium's prices have fluctuated substantially over the years. Historically, it has cost far less than gold and platinum, and its values have decreased sharply throughout time. This makes it more volatile than gold, which is known for being relatively stable. Today, however, palladium is more expensive than both gold and platinum, and its upwards price trend excites investors attracted to high-growth propositions.

Demand for palladium in manufacturing is chiefly responsible for its price rising above gold and platinum. Palladium has the following manufacturing applications:

  • Automotive catalytic converters
  • Electronics
  • Jewelry
  • Dentistry
  • Medicine
  • Hydrogen purification
  • Groundwater treatments

This year, palladium prices have increased overall. On September 23, 2020, it was worth $2,222.23 an ounce. That's an increase of $285.33 an ounce, or 14.71%, since the start of the year. However, palladium is currently on a downward trend, having peaked in February 2020. At this time, an ounce of palladium was worth $2875.50. Experts predict the price of palladium will continue to gently trend down to $2164.53 an ounce by the end of the quarter. In 12 months' time, experts believe palladium will cost around $1878.14 an ounce.[1]

Gold Price Trends and Trends in Applications

While gold prices rise and fall, they're relatively stable, making gold a good fit for investors seeking more secure investments. Demand from the jewelry industry accounts for half of the world's gold consumption. This is why gold prices often spike during the Indian wedding season as the nation's people traditionally give gold jewelry as wedding gifts.[2] Investors make up another 40%, with the remaining 10% coming from various industries.[3]

In 2020, the strength of the U.S. dollar has seen gold prices falling slightly. On September 23, 2020, it was worth $1886.85 an ounce. That's less than the price of palladium on the same day and much lower than gold's recent 2020 peak of $2075 an ounce the month before. In addition, experts predict gold prices will fall gently in the months ahead. By the end of the quarter, prices should sit at $1870.52 an ounce. In 12 months' time, we can expect gold to cost $1765.84 an ounce. All of these predictions have gold costing less than palladium.[4]

Why Is Palladium More Expensive than Gold?

The value of palladium has grown twice as much as the value of gold over the last two years.[5] There are many factors impacting the price difference between these two metals, including:

  • Demand for palladium regularly exceeds supply volumes. For the last eight consecutive years, there hasn't been enough palladium to meet industry demands. Since palladium is a byproduct of nickel and platinum mining, extractors cannot easily increase palladium output to satisfy consumers. When demand outruns supply, prices soar.[6]
  • The automotive industry's use of palladium is increasing. The auto industry consumes more than 80% of the world's palladium.[7] Several years ago, it started making catalytic convertors from palladium instead of platinum. At that time, palladium cost less than platinum or gold, but increased demand has driven the price of palladium past these metals. Carmakers are using more palladium as governments increase tighter air pollution restrictions. Despite the high price, most carmakers will probably use palladium until they find a more suitable and affordable material. This should keep the price of palladium high for several more years.
  • Demand for gold has fallen over time. In 2020's first quarter, for example, demand for gold jewelry, the key contributor to gold consumption, fell substantially. In China, traditionally the world's largest jewelry buyer, demand dropped by 65% as the pandemic-ravaged nation slowed luxury spending.[8]

Is Palladium Worth More than Gold?

A metal's worth is different from its cost. Cost is a simple financial measure, indicating an item's price right now. Worth considers an item's price now and in the future as well as quality and beauty.

Is Palladium Valuable?

Palladium is valuable right now for the following reasons:

  • It's commanding high prices.
  • It's relatively scarce.
  • It's in demand for the automotive industry and others.

Since palladium is a relatively new metal that was discovered in 1803, it's uncertain whether it will retain its value in the long run.[9] On the other hand, many investors and collectors believe gold is still worth more than palladium because it holds its value over time.

Should You Invest in Gold or Palladium?

Investors planning for the long term may be more interested in gold. Analyzing its performance over the last 20 years suggests gold is a stable, safe choice. However, if you have a more short-term focus, investing in palladium can offer substantial rewards. Prices can appreciate quickly, although you'll need to monitor the market closely to avoid substantial losses. Palladium's value is volatile, but that's part of its appeal.

Palladium is more expensive than gold, but both precious metals are great options for collecting and investing. Consider your own budget and your long-term plans when deciding which precious metals deserve a place in your collection.

Article Sources:

1. Trading Economics. Palladium, https://tradingeconomics.com/commodity/palladium. Accessed September 23, 2020.

2. Reuters. Indian Cash Crunch Hits Gold Demand During Peak Wedding Season, https://www.reuters.com/article/us-india-modi-corruption-gold-idUSKBN13K12Q. Accessed September 23, 2020.

3. Trading Economics. Gold, https://tradingeconomics.com/commodity/gold. Accessed September 23, 2020.

4. Trading Economics. Gold, https://tradingeconomics.com/commodity/gold. Accessed September 23, 2020.

5. The Morgan Report. The Gold Rush for Palladium Is On, https://www.themorganreport.com/blog/the-gold-rush-for-palladium-is-on/. Accessed September 23, 2020.

6. Bloomberg. Why Palladium Is Suddenly the Most Precious Metal, https://www.bloomberg.com/news/articles/2019-10-28/why-palladium-is-suddenly-a-more-precious-metal-quicktake-k2ap4ryc. Accessed September 23, 2020.

7. BBC News. 'More precious than gold: Why the metal palladium is soaring,' https://www.bbc.com/news/business-51171391. Accessed September 25, 2020.

8. GoldHub. Gold Demand Trends Q1 2020, https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q1-2020. Accessed September 23, 2020.

9. Royal Society of Chemistry. Palladium, https://www.rsc.org/periodic-table/element/46/palladium. Accessed September 23, 2020.