Introduction to Trading Platinum, Palladium & Copper

Platinum

Platinum is a precious metal and is used in a number of functions and processes. Platinum is used as a catalytic converter on motorized vehicles, and a catalyst for nitric acid production used in the production of fertilizers and explosives. A number of economies favor the consumption of platinum for the purpose of making jewelry, given the increased popularity of white metal jewelry in the US and also emerging markets.  It is also seen as a good investment market.  Platinum is otherwise known as high octane gold.

There is considerably less platinum available in the market than gold, which is an important factor which may have an important implication on supply for you to consider.[/vc_column_text]

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Given the great amount of uses for platinum and its comparative rarity to gold, the platinum market tends to trade at a higher price than gold. Due to its value as a scarce precious metal, the price movements in platinum can be strong and like gold, and it is felt that it is a market which could sustain a bullish trend moving forward.

A key factor to watch is the automobile industry as around half of the world’s platinum is used here. Given platinum’s use in this industry, a growth in the economy that leads to expansion of the automotive industry will have a big effect on the platinum market.

Palladium

Palladium is a precious white metal which forms part of the platinum group metals. Due to its high resistance to oxidization, it is known as a ‘noble metal’.

Palladium is used in a number of functions.  Like platinum, it is used in the production of catalytic converters on cars and other motorized vehicles, converting toxic emissions into more environmentally friendly emissions.

They are also used in the production of jewelry, especially as an alloy in the creation of white gold.  Nickel, which was previously the alloy of choice for this purpose, was banned by the European Union in 2000, due to health concerns.  Palladium is also increasingly being utilized within electronic circuitry.

Supply & Demand & the Factors Affecting Price

Like platinum, the biggest players in mining palladium are Russia and South Africa. Two major factors to palladium demand to be aware of are that of the jewelry and automotive industry.

In the Platinum group metals, namely platinum and palladium, the main source of fundamental data reports are released by a Johnson Matthey.  They are a specialist chemical company with expertise in the platinum group metals.

They provide a bi-annual report which provides a review of supply and demand for these metals. It’s important for you to be aware that given the limited number of palladium producing nations in the world, the market can be somewhat volatile, much like the platinum market.

Copper

Copper is a non-ferrous, soft metal, known for its malleability and is a very strong conductor.  It is a base metal, i.e. is a metal of which there is a greater abundance of and doesn’t have the same value attached to it as one of the precious metals.

Copper is the third most popularly used metal in the world, behind aluminum and steel.  Its strength together with its other attributes previously mentioned renders copper as the conductor wire of choice in construction. Copper also plays a very important part in solar panels, as a cleaner energy source means more demand for copper.

Supply & Demand & The Factors Affecting Price

The nation which produces the most amount of copper is Chile.  Copper from the nation constitutes around one-third of the world’s mined copper.  Other prominent copper producing nations are the US, Australia, China, Peru and Indonesia.

China is the world’s largest consumer and importer of copper in the world.  With this in mind, it is important to know about the state of the Chinese economy which may in turn impact upon Chinese demand for this popular base metal.  Looking at Chinese export sales figures can provide a good indication of this.

The US is also a major importer of copper, with half of the imports originating from Chile.  Knowing this, one of the best releases which provide fundamental data on copper can be gathered from New Residential Construction Report also known as Housing Starts, released by the US Census Bureau, monthly around the 17th day of each month.

It is a main component in construction (electrical wiring and plumbing) so if we see a decrease in unemployment, the implication is that more houses are being built we would see a rise in copper prices.

Be aware that like gold and silver, Platinum, Palladium and Copper are finite resources, meaning that they should always be in demand and could possibly be very profitable in years to come when reserves of each of these become scarce.

Things to Take Away

  • There are a number of things you should now be aware of with these metals. You need to be aware of the key fundamental drivers in these markets.
  • You need to know the major mining nations, which are important in light of supply.
  • It is also important for you to be aware of consuming nations and the industries where they are predominantly used, which in turn will affect demand.
  • You need to stay abreast of any breaking news reports or data releases which will impact upon their fundamentals.
  • With this, you will provide yourself with the best background to trade the market.