Market Insights

Will Palladium Prices Rise and Hit $5,000 an Ounce in the Future?

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Will the price of palladium hit $5,000 an ounce?

Last updated: 7/1/2022

Will palladium prices rise? What is the current spot price of palladium? With everything going on in Russia and Ukraine will palladium go up? Most are aware that Palladium is a great option during times of economic turmoil. It should not shock you to know that financial advisors believe it is increasingly likely that palladium’s price will hit a record setting high. In this article we will discuss the factors which affect the price of palladium, might cause palladium to increase in price, and when this could happen, shooting palladium to $5000 an ounce.  

The current palladium price and its recent history  

As of the time this article was last updated, the current palladium price was $1,988.48 (+1.19%) an ounce (the current price of palladium can be found at the top of every page on our website). Why is the price of palladium so valuable? Palladium is a primary element in gas cars to help reduce emissions. As vehicle emission standards increase, so will the use and price of Palladium. Palladium hit a high of over $2,900 an ounce in May 2021 before dropping down to just over $1,800 an ounce.

Is it possible that the price of palladium will hit $5,000 an ounce soon?

What factors could make palladium prices rise?  

While the cost of palladium would need to rise by 100% to reach $5000 an ounce, this is actually quite possible. Will palladium go up? Here are the factors that could drive palladium price to new historic highs: 

1) Russian invasion of Ukraine causes massive supply shortages

Currently Russia accounts for approximately 40% of all Palladium mined. Just two days ago, 6 April 2022, London banned the import of Palladium from Russia. US sanctions will likely be a large factor in Palladiums rise in cost. The United State, Germany, Hong Kong, China and Japan are the biggest importers of palladium due to the large proportion of cars produced by these regions. 

2) Rising demand for production 

Global demand for palladium is reaching all-time highs as the precious metal. One of the largest producers of emissions in the world is from vehicles. As more and more countries adopt policies to protect the environment the required production of palladium will also rise. This will continue to drive the cost up due to the overwhelming demand for palladium. 

3) Uncertainty in the stock market 

While palladium cost is usually not directly tied to the stock market, precious metals prices have historically shown that they will rise as equity values drop. If the stock market sees a correction or there is a drastic drop, the price of palladium could very well go up. In December of 2021 stock indexes were at an all-time high but dropped in the early part of 2022. This might indicate that the stock market is over-valued, which is supported by the Buffett Indicator. People will ask questions like will palladium hit $5000 an ounce if they lose confidence in the market. History has shown us that people could turn to palladium as an investment over the stock market. 

4) Rising inflation in the US 

Of course, the elephant in the room is inflation and how it is tied to the potential rise in palladium costs per ounce. The Inflation Crisis in 1980 saw inflation reach a high of 14.76%. During this time, the cost of palladium shot up from $40 per ounce to over $280. This was a 600% increase in the cost of palladium per ounce. With inflation soaring and its demand increasing it is quite possible that we will see palladium hit $5000 per ounce. 

5) Struggling mining and supply production  

The demand for palladium is continuing to rise, but its continuing production is in question. 40% of palladium is mined in Russia, and an additional 40% is mined in South Africa, with Canada taking a very distant third. The supply is constrained due to a lack of a stable electrical grid, rising fuel cost, an increase in construction materials have all slowed the output from South Africa in the past. 

6) Global supply chain challenges 

In 2020 we dealt with supply chain issues due to the effect of COVID-19. This was exasperated by the outdated system that the United States uses at its ports. With the constriction of the supply chain, palladium cannot be delivered with the same expediency that we saw in the past. With an increase in demand for palladium due to the automotive industry, it could quite possibly reach $5000 per ounce. 

How long could it take for palladium prices rise?  

The most likely way palladium prices could rise would be if the economy goes through a cycle of runaway inflation over the next 10 years. We saw this price jump in 1980 due to inflation, imagine where it could jump if inflation continues to grow. 

Here are some key events that, if that take place, could answer the question will palladium hit $5000 an ounce: 

2022 – Run-away inflation drives prices up and people flock to precious metals 

In an extreme scenario, we could see inflation take the reins and bring palladium prices over the $5000 mark. If inflation continues to rise and reaches double digit values through 2022 and 2023, the $5000 price of an ounce of palladium could be possible. 

Consider that in 2021, we saw inflation rates averaging around 5%, which was the highest rate of inflation since 2008. Not only will the inflation raise the price of palladium, but more investors could seek precious metals like palladium, which could also drive the price up. 

2024 – Mountains of US debt causes huge spikes in interest rates  

Even if the Fed figures out how to control our current inflation crisis, the US National Debt is still looming over us. In early February of 2022, our National Debt reached over $30 trillion for the first time ever. When bondholders push the US to pay higher interest rates, those rate hikes could trickle down to the average US consumer. This could also cause a movement where investors may turn to palladium as safe haven assets that still contain high growth potential. 

Is it “paladium” or “palladium”?

Although often confused, the correct spelling of this precious metal is “palladium” and not “paladium”.

What is the best way to learn more about palladium?  

Do you want to know more about how you can acquire palladium for your portfolio? Contact our Account Executives today. They are standing by to assist you in acquiring palladium for your Precious Metals IRA or direct purchase. Call us today at (888) 734-7453.

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