Follow Palladium Futures Traded on NYMEX
You can gain exposure to the precious metals trading through palladium futures, which are traded on the New York Mercantile Exchange (NYMEX).
As a member of the Platinum Metals Group, palladium is an interesting metal because of its relative rarity and wide industrial applications.
This precious metal is often found in ores with its even rarer cousin, platinum, and sometimes with nickel, as in the Norilsk mining region in the Russian High Arctic.
It has an annual global production of approximately 8 million ounces with the main producers being Russia (between 50-67%), followed by South Africa (20%) and then the USA and Canada.
You can now subscribe to the free Commodity Universe Ezine below, and get the latest articles on the commodity sector . Just your first name and email. It's as easy as 1-2-3!
Now in 2008, December palladium futures are currently $460 per troy ounce.
This is a clear example of how uncertainty over supply constraints can cause the market price to rise very quickly as it reflects a perceived shortage of the commodity.
While this can provide profit opportunities, it can also lead to a loss of capital.
Such an environment illustrates the investment possibilities of holding precious metals and particularly in this case, palladium futures.
Main uses for this precious metal are catalytic converters for automobiles (about 60%), electronic equipment, such as mobile phones and computers (24%), medicine and dentistry (12%) and jewellry, as alternatives to white gold and platinum.
Trading Palladium Futures To trade this futures contract you can either use the open outcry system on NYMEX (from 8.30 am to 1.00 pm New York time, weekdays) or use the CME Globex electronic trading platform, which is growing in popularity. The CME Globex system is open from 6.00 pm to 5.15 pm Sunday to Friday, with a 45 minute break between 5.15 pm and 6.00 pm. Trading is over a period of 15 months and in quarterly periods ending in the months March, June, September and December.
The last trading day is the third business day before the end of the delivery month.
Prices of palladium (trade symbol: PA) futures contracts can fluctuate by $0.05 per troy ounce. Exchange of Futures for Physicals It is possible, if you are holding a palladium futures contract to exchange this for a physical position, that is the actual metal, with roughly the same quantity and value.
This is referred to as an EFP or Exchange of Futures for Physicals, and can be used when opening or closing a futures position.
To fulfill the contract (within the Commodity Exchange Act) the seller must deliver 100 troy ounces of palladium, either as ingots or plates. Each quantity must have a fineness of not less than 0.9995.
The ingot or plate should have the weight, grade, assayer logo and bar number together with the palladium symbol, marked into the metal surface.
Applications of Palladium
The metal has a number of technology applications, and a notable characteristic of palladium is its ability to absorb over 900 times its own volume of hydrogen to form a metal hydride. This has important potential future applications but given the metal’s cost as a rare, precious metal it will probably only improve understanding of the molecular processes.
Any large scale use of metal hydrides would likely need a more abundant metal than palladium but with similar characteristics.
Producers and commercial end-users such as automobile manufacturers will continue to hedge prices as part of commercial practice.
But there may be changes in the area of palladium and other precious metals trading.
One way may be that this class of metal commodity will be seen more as an investment for asset allocation rather than just for pure speculation.
The growth of exchange traded funds make this a possibility and there may also be more focus on palladium in some of the main commodity indexes going forward.
ICE Brent, Middle East Sour, WTI ICE Rotterdam and Richards Bay Coal
|
