Would you like to invest in palladium? Palladium is one of the most important forms of metal sold on global markets, being used in everything from consumer electronics to essential motor vehicle components.
Since palladium is such an important commodity, it’s a sound investment for people interested in diversifying their portfolio beyond stocks and bonds. Palladium prices are relatively stable, and growing demand for this metal means they could increase.
The easiest way to invest in palladium is through a palladium exchange-traded fund (ETF). Palladium ETFs are traded like stocks on an exchange, making them easy for investors to buy and sell.
In this guide, we’ll look at the unique benefits and disadvantages of using palladium exchange-traded funds to build your investment portfolio. If you’ve never invested in ETFs before, be sure to enroll in our course, The Basics of ETF Investing.
How do palladium exchange-traded funds work?
A lot of investors have profited from the rise of gold and silver prices over the past decade. Although it may not be as well known as gold and silver, palladium is one of the world’s most important and valuable metals.
Palladium is used in the manufacturing of everyday consumer items like cellphones and computers, as well as in vehicle components. More than half of the entire supply of palladium worldwide is used in catalytic converters – an essential component in modern cars and motorcycles.
Palladium ETFs monitor and track the value of palladium as it’s bought and sold by investors. Some palladium ETFs also buy palladium, with the value of the fund as a whole determined by the global palladium price.
Because ETFs are traded on an exchange in the same way that stocks are, they’re a very easy platform for investing in palladium. Instead of buying physical palladium or investing in futures contracts, you can simply invest in a palladium ETF.
As ETFs are traded on an exchange, you can day trade them or invest for the long term, just like you would with stocks. Our course, Stock Trading Ninja, shows you stock trading strategies that you can apply to your investment in palladium.
What are the advantages of palladium ETFs?
Investing in palladium through an exchange-traded fund can be a great idea. Since exchange-traded funds are bought and sold on an exchange, they offer numerous benefits compared to buying physical palladium, from tax benefits to simplicity.
One of the best aspects of investing in palladium using an ETF is the simplicity of buying and selling. If you invest in palladium via a futures contract, you’ll need to keep track of numerous variables related to the contract itself.
Likewise, buying physical palladium is often a difficult, time-consuming process. It can take several days to receive ownership of your palladium, and there is often the trust issue of storing commodities you own with a third-party investment firm.
A palladium ETF, on the other hand, can be bought and sold in minutes. Since ETFs are traded on an exchange, they’re easy to invest in and equally easy to sell as your investment’s value increases.
Adding a palladium ETF to your portfolio is an excellent way to diversify your total holdings. Many people invest heavily in stocks, which puts them at risk of being hit by changes to market conditions. Palladium, a commodity, is a great risk-reducing investment for people primarily invested in stocks.
Would you like to add a palladium exchange-traded fund to your portfolio? Enroll in our Investing Fundamentals course to learn about the importance of keeping your investment portfolio diverse to generate stable, predictable income.
How can you earn money from palladium ETFs?
Do you think palladium is currently overvalued? Do you think it’s undervalued? If you believe there could be movement in the price of palladium, you could generate income by buying or short selling a palladium exchange-traded fund.
If you think the price of palladium is currently too low, and that its importance as a manufacturing commodity could lead to an increase in the price of palladium, you’ll benefit from investing in palladium ETFs.
On the other hand, if you think that the price of palladium is artificially high, either due to a commodity pricing bubble or an unsustainable surge in investment for the sector that purchases palladium, you can short sell the ETF to generate income.
Short selling involves borrowing shares of a palladium ETF from a brokerage, only to sell them at the current market price. If the price of palladium declines, you can repurchase the palladium ETF and return it to the brokerage at a profit.
Would you like to learn more about short selling and other trading techniques? Our course, Foundations of Stock Market Trading, shows you how to profit from stocks, exchange-traded funds, and other investments.
Why should you invest in palladium ETFs?
When you invest in a palladium ETF, you invest in palladium as a commodity. Since palladium is such an important metal for industrial manufacturing, its value is fairly consistent and it can be a stable, profitable investment.
Furthermore, since palladium is such an important material to the rapidly-growing technology and automotive industries, its value could potentially increase over the coming months, years, and decades.
Due to inflation, palladium is often a more sound passive investment than keeping your savings in a bank. Informed investors might track the average increase in the value of palladium and compare it to the average bank’s savings interest rate.
Understanding the importance of capital, as well as factors such as inflation and the average growth of a commodity’s value, is an essential aspect of investing. Our blog post on stock market investing explains many principles, such as value investing, that can be equally valuable when investing in commodities like palladium.
Are you ready to start investing in palladium ETFs?
From its importance to automotive manufacturers to its growing role in consumer electronics, palladium is undoubtedly one of the world’s most essential metals, and an excellent investment opportunity.
Are you ready to start investing in palladium ETFs? Top up your exchange-traded fund knowledge with our course, The Basics of ETF Investing, and get started with palladium investing today!