Why Palladium Is Beating Other Precious Metals

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Oct. 03 (Bloomberg) -- Bloomberg's Andrew Cosgrove puts futures in focus with a palladium compared to other precious metals in "On The Markets." He speaks on Bloomberg Television's "In The Loop." (Source: Bloomberg)

The other precious metals?

Palladium has been benefiting from strong auto markets in the u.s. and china.

Gold, silver, even platinum are down.

The leakiness and platinum has been characterized by the weakness in the european auto market where there is more diesel.

They use palladium in the u.s. and china as the main counterpart for the converters.

If this government shutdown persists and consumers are gunshot about making big-ticket purchases, with that have an effect on plain young -- on pa lladium?

It could.

Anything that feeds into negative macro sentiment, chart and consumers away from big- ticket purchases.

Auto markets would have a negative effect on palladium.

You have seen this seasonally adjusted annual rate for u.s. auto sales come down a little bit.

It is still pretty elevated if you look back to the levels in 2007 and 2008. it has come far off the bottom.

Still slated for the best year since 2007. tell us about investment demand.

How has that held up verses for gold and silver?

You have etf holdings for gold down around 20 eight percent.

Etf holdings for seller surprisingly up.

That is a function of people who bought earlier in the rally in 2010. if you look at palladium, etf holdings up 18% at about 340,000 versus the 385,000 you saw in 2012. on pace to beat some of the estimates for investment demand on the supply and demand side.

We have a new palladium etf being launched in south africa.

The investor response from the platinum etf launched earlier was possible.

I think market participants are looking for a similar response for palladium.

What about the supply-side?

We have talked about demand from the u.s. and chinese auto markets.

Is there enough supply to feed the demand?

You saw supply dropped somewhere around 4 to numeral five percent last year.

You are continuing to see the same struggles you saw in south africa on the supply side as you saw last year.

You also have russian stockpile sales which have added around one million ounces per year in supply.

Those came down to about 400,000 last year.

Word from the largest palladium producer out of russia is that they are expecting supplies to dwindle to almost nothing.

That is a development if you are looking for support for prices going forward.

A lot of tailwind for palladium.

Andrew cosgrove of bloomberg winchesters -- bloomberg industries.

"market makers" starts right now.

Live from bloomberg

This text has been automatically generated. It may not be 100% accurate.

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