Everything you need to know about this precious metal
Palladium is a rare metal that belongs to the platinum group of elements. The silvery-white metal has a high melting point, is resistant to corrosion, is a good conductor of electricity, and maintains the ability to absorb large amounts of hydrogen.
Industrial uses of palladium include applications in dentistry and electronics, but most of the world's palladium supply is allocated to the manufacture of catalytic converters.
Palladium supply
As a rare metal, palladium is also increasingly seen as an investment proposition. With limited supply, most of which comes from mines in Russia and South Africa, the price of palladium is volatile, depending on both geopolitics and - given its industrial value - the global macroeconomic environment.
Palladium overtook gold as the most expensive precious metal per ounce in January 2019, with its price trebling between 2018 and 2021, before falling back. But what is palladium and what are the best ways to invest in it?
Discovering palladium
Palladium was discovered in London in 1803, by English chemist William H. Wollaston, who also discovered rhodium in the same year.
Wollaston examined the residues left from crude South African platinum ore after dissolving it in aqua regia, a concentrated aqueous solution of hydrochloric acid and nitric acid. He succeeded in isolating palladium in a series of chemical reactions, finally heating palladium cyanide to extract palladium metal.
Wollaston then left a quantity of the metal for sale with a mineral dealer in Gerrard Street, London, and anonymously posted handbills throughout the city, describing the new metal’s properties.
Fellow chemists were suspicious of the discovery, suspecting palladium to be an alloy of mercury and platinum. In response, Wollaston anonymously offered a reward of twenty guineas to anyone who could artificially produce palladium. The reward went unclaimed.
In 1805, Wollaston broke cover and explained his discovery before the Royal Society of London, speaking about palladium's properties and its isolation from platinum.
He claimed that he had remained anonymous so that he would have the time to understand and explain all of the metal’s properties before putting his name to a full account.
The element is named after the then-recently discovered asteroid, Pallas, which is itself named after the Greek goddess of wisdom.
Palladium's properties
Palladium - 46 in the periodic table with the symbol Pd - has the lowest melting point and is the least dense of the platinum group metals. It resembles platinum in its appearance, and heated palladium is soft and ductile, while the free metal increases its strength and hardness when cold-worked. Like gold, palladium can be beaten into a thin leaf.
Palladium does not react with oxygen in normal temperatures and so does not corrode or tarnish in air, while temperatures of 800 °C will produce a layer of palladium oxide. A range of palladium compounds can be formed through reactions with chlorine (palladium dichloride), acetic acid (palladium(II) acetate) and other chemicals. Some palladium compounds can also be used as catalysts in coupling reactions.
Palladium can also absorb up to 900 times its own volume in hydrogen, a property that can be used in hydrogen purification or the activation of the element for further chemical reactions.
Where is palladium found?
210,000 kilograms of palladium were mined in 2022, with both Russia and South Africa accounting for approximately 40% of world production.
Palladium can be found alloyed with gold and other platinum group metals in alluvial deposits in Russia, Australia and South America. However, the most important commercial deposits of the metal are in the Merensky Reef layer of igneous rock in South Africa and the Norilsk-Talnakh deposits in Siberia. Most palladium on world markets comes from these sources.
The control of such valuable rare earth materials by Russia has been one of the factors behind the volatility in palladium supply and pricing since the invasion of Crimea in 2014 and the war in Ukraine in 2022.
What is palladium used for?
Catalytic converters
Catalytic converters in cars and trucks use less than one-fifth of an ounce of palladium, but this still accounts for the highest industrial use of the metal.
Helping to reduce emissions of carbon monoxide, hydrocarbons and nitrous oxide, catalytic convertors rely on palladium's capability of producing organic transformations leading to less harmful chemicals - carbon dioxide and water vapour- reaching the air from car engines.
Dentistry
Palladium is used worldwide in the development of alloys used in crown and bridge restorations by dental technicians. Palladium's lack of tarnish or corrosion, its white colour and low density make the material an ideal substance for dental alloys.
Electronics
Palladium's resistance to corrosion leads to it being used in the manufacture of multilayer ceramic capacitors, components of mobile telephones, personal computers, and many other electronic items.
Chemical and pharmaceutical industry
The properties of palladium as a catalyst - speeding up chemical reactions - have led to its widespread use in the pharmaceutical industry, changing how exploratory drug candidates are synthesized and how some chemicals and pharmaceuticals are manufactured.
Jewellery
Palladium is becoming increasingly common in jewellery, particularly in the form of "white gold", where the metal is alloyed with gold, producing a decolourised compound. Palladium is also used in jewellery and watchmaking in its own right, often as a less dense alternative to platinum that can be beaten thin and moulded without losing durability.
Palladium as an investment
With limited supply and considerable demand, palladium has increasingly been seen as an investment opportunity, particularly among investors looking to diversify their portfolio to include precious metals, and also among those who wish to further diversify their metal investments.
Palladium prices tend to rise in times of economic calm, when manufacturing is doing well, but the rarity of the element can boost prices when markets are struggling or there are practical concerns about supply.
The price of palladium has been volatile. A spike in prices at the time of Russia's 2022 invasion of Ukraine led to record highs on the back of supply fears centring on the world's top producer, and although palladium is trading at around half that price one year on, it is still holding triple the value per ounce compared to a decade ago.
Ways of investing
As with gold and silver, investors can buy physical palladium, exchange-traded funds (ETFs), futures or derivatives. The London Bullion Market Association (LBMA) administered by the London Metals Exchange sets auction prices for professional dealers on the palladium market.
Palladium can be bought through BullionVault in the form of London Good Delivery bars, which are stored and insured in specialist vaults in London in the UK. The fact that physical palladium is stored in acredited vaults means that the investment is not subject to VAT, meaning that low commission, storage and insurance charges are the only fixed costs of investment. Palladium bars can ofcourse be delivered to the investor but would incur VAT and additional security and delivery charges.
