Another way for investors to participate in the palladium market is by buying stocks of palladium producers. While generally, the price of palladium stock correlates with the price of palladium, other factors such as the company's management's competence, operating strengths and future growth prospects also affects the stock price. Unforseen events such as strikes by the mine workers can also severely affect the stock price in the short term.
As palladium occurs together with other platinum group metals in the palladium ore, palladium mining also produces other PGMs such as platinum and rhodium as by-products. As such, if the company also produces significant quantities of platinum, any adverse movement of platinum spot price will also negatively impact the palladium stock price.
Another important point to consider when investing in palladium mining stocks is how much of the company's future production has been hedged. A palladium producer with a substantial proportion of future production hedged will not benefit as much as an unhedged producer if palladium price goes up signifcantly. Similarly, if the price of palladium takes a dive, the unhedged producer will suffer a greater reduction in earnings (and may even report losses) when compared to the company whose palladium production is substantially hedged. Unhedged palladium stocks offers greater leverage while hedged palladium producers offers more stability.
Unlike owning physical palladium, ownership of palladium mining stocks also let the investor earn a dividend, in addition to capital gain. Furthermore, as palladium price goes up or as the company expands (or both!) and profits grow, the dividend payout will also rise.
Major Palladium Mining Companies
How to Start Trading Palladium Mining Stocks
To buy or sell palladium mining stocks, you need to open a trading account with an online stock brokerage such as TD Ameritrade. We recommend TD Ameritrade as they provide a virtual trading platform where beginners can try out stock trading in real market conditions without using real money.