Key Facts
Annual global production: approximately 7 million ounces
Russia (~40%) and South Africa (~40%) dominate supply
Over 80% of demand comes from automotive catalytic converters (gasoline engines)
The metal was trading below \$200/oz in 1997; it peaked above \$3,000/oz in 2022
The Supply Story
Palladium is not mined directly — it is primarily a byproduct of platinum and nickel mining. This means supply cannot easily respond to price increases. When demand exceeds supply, deficits persist and prices can move dramatically.
Industrial Applications
Catalytic Converters:: The dominant use, converting harmful exhaust emissions into less harmful gases
Electronics:: Used in multilayer ceramic capacitors found in smartphones and computers
Dentistry:: Palladium alloys are used in dental crowns and bridges
Hydrogen Purification:: Palladium membranes can filter pure hydrogen from mixed gas streams
Investment Thesis
Palladium offers asymmetric upside potential due to its constrained supply and concentrated production. However, it is the most volatile of the four precious metals and requires a higher risk tolerance. Most advisors suggest a small palladium allocation within a broader precious metals portfolio.
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