Palladium is growing faster than other precious metals, for the first time in the past 16 years, it has reached gold ratios, reports Reuters.
Limited supplies, high deficits and a growing interest in speculative investors have led to a 40% increase in palladium prices over the past three months. The price of this metal, which is mainly used for the production of catalysts for vehicles, reached a record value of $ 1,185.40 per ounce on Friday, from just $ 35 below $ 1,220 per one ounce of gold.
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"What we see is the peak of a long-standing persistent deficit, the next 1,200 is the next psychological breakthrough." I expect to be $ 1,300, "said Jonathan Butler, an analyst at Mitsubishi.
Analysts in Citibank believe that the situation on the physical palladium market is among the heaviest in the last two decades.
The Johnson Matthey car maker is expecting a deficit of 239,000 ounces this year, while GFMS analysts predict a deficit of more than one million ounces in each of the next three years in the Palladian market, estimated at 10 million per year.
Palladium prices rose this year despite the decline in car sales in China, the world's largest car market and stagnating sales in the US, which is the world's second-largest market. The automotive industry is responsible for 80% of the demand for palladium.
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However, arguments for the growing palladium market are supported by the transition of European car manufacturers to petrol-powered cars following a diesel fuel scandal that may require large amounts of palladium to build catalytic converters.
This is further enhanced by the fact that palladium stocks are diminishing. The stocks monitored by Nymex amount to 46,965 ounces, which is the lowest level since 2003. Also, ETF-funded palaid stock dropped below 800,000 ounces in 2015 from 2,6 million ounces.