Connect with us

Commodities

Trade Recommendation: Palladium is Soaring – Best Performing Precious Metal in 2017

Published

on

Several sources are now reporting an increasing supply deficit for palladium in 2017. According to a report by the Financial Times, “the palladium market is witnessing a rising deficit”. This would mark the sixth successive year of significant supply shortages in the palladium market, whereas its sibling platinum this year may be experiencing its first supply surplus in six years.

// -- Discuss and ask questions in our community on Workplace.

Best-performing precious metal year-to-date

In addition to this, as we have previously reported here on Hacked.com, palladium has outperformed both gold, silver, and platinum by more than 300% since 2009, and outperformed all other commodities in the Bloomberg Commodity Index so far in 2017.

The chart below shows the price of palladium in US Dollars over the last 12-month period. As you can see, this is a healthy trending market, trading above both the 50 and 100 day moving averages. It is exactly the type of market any trend following trader should be invested in.

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

Strong fundamental support

Palladium is an industrial metal primarily used as an important component in catalytic converters that reduce the amount of harmful air pollutants from cars. As we have spoken about before, some analysts believe that this will continue to drive the price of palladium higher, as China and other large developing countries are stepping up the fight against air pollution.

Platinum, on the other hand, is used in diesel-fueled cars, which are now experiencing a downturn mainly due to environmental concerns. As the trend of gasoline fuel being favored over diesel continues, the price of palladium is expected to continue to rise at the expense of platinum, and may soon surpass it, despite being known as a “lesser” metal.

Limited and vulnerable supply

Being far rarer than both gold and silver, palladium (and platinum, for that matter) is almost exclusively mined in only two countries; Russia and South Africa. In the case of South Africa, output of this precious metal is under pressure from political instability, labor strikes, high operating costs for miners, and infrastructure problems. The Russian production is relatively stable, but there are almost no new palladium mining operations being started, even as demand for the metal is continuing to grow.

How do I play the surge in palladium?

Probably the best way to play the palladium market is through the ETFS Physical Palladium Shares with the ticker code PALL. This ETF is backed by physical palladium bullion bars stored in its vaults in London and Zurich. ETF’s are in many cases a cheaper option for long-term investments in precious metals, when compared with physical ownership, and they can be traded through most online brokers.

FOREX trading

Many brokers also let you trade palladium on margin in the forex market under the name XPDUSD, as shown in the screenshot below from my Saxo Bank brokerage account.

This is the option I recommend for shorter-term trading, because of the relatively low transaction cost compared with the benefits of the leverage you get. Keep in mind, however, that spreads can be wide for metals like palladium, as there is far less trading activity in them than for example in the gold and silver markets.

Physical ownership

Although physical ownership is sometimes more expensive than simply investing in an ETF, it comes with a good sense of security, has an inherent value for collectors, and is not subject to any third party risks. You can touch and feel your own precious metal without involving the taxman or the bank at any step of the way. It is perhaps the ultimate solution for the small investor who just feels good about keeping a portion of his wealth in a tangible asset.

You may also choose to buy physical bars or coins and have it stored in a vault for you. Great places both for buying and storing precious metals is Hong Kong and Singapore, where you can trade physical precious metals at some of the lowest buy/sell spreads in the world, as well as storing it for a very low cost.

What’s next for palladium

Despite having risen almost 50% over the last 12 months, palladium may well continue to climb further. There is no new supply coming to the market, and demand for gasoline-fueled cars (at the expense of diesel-fueled cars) continues to grow from emerging markets.

When people look to invest in precious metals, gold is usually what comes to mind. However, with the increasing industrial demand for the other precious metals, in addition to investment demand, it is clear that there may be more potential for profit with some of gold’s less shiny siblings. In this respect, palladium is well-positioned to surpass platinum and become the most sought-after precious metal after gold and silver.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.3 stars on average, based on 28 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.




Feedback or Requests?

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Analysis

Silver Prices Poised for a Breakout – Overview of Key Trigger Levels

Published

on

Long-Term View

  • Since 2003, silver has exhibited spectacular volatility, increasing by more than ten-fold by the 2011 peak, before declining by more than 72% by end of 2015. Despite the volatility over this 15-year period, the commodity has found support on several occasions at a key long-term trendline (green trendline; retests – green arrows in Figure 1). More specifically, silver bounced off the support in 2008, 2015, and most recently in 2017 (green trendline currently at $15.50).
  • For 2 years (2011- early 2013), silver found support just around the $26 level, before finally breaking below and plummeting in April 2012 (blue horizontal trendline; sell signal – last blue arrow).
  • While, it can be said that silver, similar to gold, has been forming a large inverse H&S pattern since 2013 (neckline – yellow trendline), silver is further away from giving a buy signal based on this potential development. It is really the short-term view that reveals a well-defined pattern, whose completion may give a timelier signal.

Figure 1. Silver (XSLV.X) 8-Day Chart 

// -- Discuss and ask questions in our community on Workplace.

Short-Term View

  • Zooming in, the daily chart reveals a strong support in the $15.50 – $15.80 area (violet line at $15.70). Notice how when the commodity broke below $15.50 for the first time, it moved sharply lower, before finding support at the long-term support discussed in the long-term view (green arrow). Within a couple of trading sessions, silver was back above $15.50.
  • A much more well-defined inverse H&S pattern is observed on the daily chart (lows – orange ellipses, neckline – orange downward sloping trendline, target – orange vertical line).

Figure 2. Silver (XSLV.X) Daily Chart  

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

Implications

  • A break above the neckline of the small inverse H&S will activate an upward target of $21.75. Furthermore, such a breakout would trigger a buy on the larger inverse H&S.
  • While, a potential buy signal on the longer-term view may generate a target close to $28, the $26 level is expected to serve as a major resistance (i.e. resistance at $26 should take precedence over most other technical developments).

Outlook

  • Neutral with a bullish bias.
  • If silver breaks the orange trendline (a close above $17.80 should be used as a trigger) outlook will shift to bullish.
  • If the commodity breaks below $15.50, outlook will shift to bearish, as that would imply that both the $15.50 – $ 15.80 support area (violet trendline) and the long-term support (green trendline) have been breached.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
4 votes, average: 5.00 out of 54 votes, average: 5.00 out of 54 votes, average: 5.00 out of 54 votes, average: 5.00 out of 54 votes, average: 5.00 out of 5 (4 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.7 stars on average, based on 10 rated posts




Feedback or Requests?

Continue Reading

Commodities

Is Oil About to Spike Again?

Published

on

The recent attack on Syria by U.S. and ally forces has raised the prospect of another major spike in oil prices, according to JPMorgan Chase & Co. Oil, already at more than three-year highs, could be poised for another 10% gain in the short term.

// -- Discuss and ask questions in our community on Workplace.

JPMorgan’s New Outlook

The U.S. multinational investment bank recently issued a forecast calling for $80 a barrel oil, citing an expanding presence of Western forces inside Syria as well as the threat of new sanctions on Iran, a major oil-producing nation. Brent crude, the international futures contract , closed at $72.58 a barrel on Friday for a weekly gain of 8.2%. A price point of $80 a barrel would put Brent at roughly 70% of mid-2014 levels.

U.S. counterpart West Texas Intermediate (WTI) rose 8.6% during the course of the week to settle at $67.39 a barrel.

“Risks we thought might materialize this summer through Iran sanctions are emerging somewhat more quickly due to events in Syria,” JPMorgan strategists led by John Normand wrote on Friday.

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

U.S., British and French missiles pounded Syrian targets early Saturday in response to an alleged chemical weapons attack carried out last weekend. U.S. President Donald Trump declared “Mission accomplished” shortly after the blitz, which included 105 missile strikes fired on three targets.

While it is unclear what the response will be once markets reopen on Monday, the Trump administration has indicated the missile strikes were not a recurring event. That said, Washington’s ambassador to the United Nations Nikki Haley said the U.S. forces are “locked and loaded” to carry future attacks if the Syrian government uses chemical weapons again.

Syria and Russia have both denied that a regime-led chemical weapons attack took place and no conclusive evidence has been brought forward on the matter.

The Case for Commodities

JPMorgan analysts aren’t the first to declare commodities a good investment at this stage of the business cycle. Strategists at Morgan Stanley have noted that energy stocks have historically been a “very consistent late-cycle outperformer,” which puts them on firm footing to beat the weakening bull market.

The energy sector has rebounded sharply from the multi-year downtrend in oil prices, but has severely underperformed the S&P 500 Index this past year. The $3.8 trillion worth of energy stocks represented on the S&P 500 have gained a mere 1.7% over the past 12 months, compared with a 13.3% return for the broader index.

Commodities like crude oil and gold are also benefiting from a weak U.S. dollar. The closely-watched dollar index (DXY), which tracks the greenback’s performance against a basket of six currencies, is down 2.5% this year. The dollar posted negative returns in 2017 and in January was off to the worst start to a year in over three decades.

In addition to energy stocks, the following oil-related portfolio recommendations were put forward by JPMorgan:

  • Long WTI call spread
  • Long Brent calendar spread
  • Overweight the S&P 500 Energy Index
  • High-yield energy credit
  • U.S. versus euro five-year inflation-linked bonds
  • Long Canadian dollar versus Japanese yen

However, gold may be the more attractive bet over the long term as geopolitical risks and rising U.S. shale production squeeze oil prices. Even the strategist at JPMorgan said the $80 a barrel price point would likely only be good for three-to-six months before U.S. producers flood the market again. As we’ve mentioned before, U.S. crude producers can make profits with prices as low as $40.

The current risk-off environment could also boost the appeal of cryptocurrencies, which are said to offer store-of-value characteristics. It has been argued that volatility and ‘FUD’ (fear, uncertainty and doubt) have masked the intrinsic value of crypto assets during the latest downtrend. Given that the underlying fundamentals have only changed for the better, a more sustained rally in crypto assets could strengthen portfolios struggling with the late-cycle blues.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
2 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 5 (2 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.5 stars on average, based on 354 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




Feedback or Requests?

Continue Reading

Analysis

Analysis: Gold Continues Oscillating, on the Verge of a Major Signal

Published

on

Long-Term View

  • In 2015, gold found support at its 2008 peak (resistance-turned-support in Figure 1 – white trendline; GLD chart shown).
  • In August 2017, the commodity broke above a key resistance (violet trendline), which subsequently served as support on two occasions in October and December of 2017 (violet arrows).
  • Gold has formed a large, multi-year inverse H&S pattern (lows – yellow ellipses, neckline – yellow downward sloping trendline). 2017’s failed attempt to break the neckline (yellow arrow) confirmed the importance of the trendline, even if the observed pattern does not prove to be an inverse H&S. In 2018, the commodity has oscillated sideways, going above and below the trendline several times (see Short-Term View).

Figure 1. GLD 6-Day Chart  

// -- Discuss and ask questions in our community on Workplace.

Short-Term View

  • The commodity has been trading in a horizontal channel since January 2018 (blue horizontal trendlines), with an upper boundary roughly 1% away from 2016’s high.

Figure 2. GLD Daily Chart  

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

Implications

  • While it could be argued that the neckline of the H&S has already been broken to the upside, given the commodity’s price action in 2018, one should wait for the short-term to align with the long-term view for a confirmation.
  • A break above the upper boundary of the channel will activate 2 targets. A conservative one (with a 4% upside) if the channel is considered to be a “trading range”. A more aggressive target (with a 9% upside) is obtained if the channel is considered to be a “flag”. A move above 2016’s high should be used as a confirmation of the breakout.

Outlook

  • Neutral with a bullish bias.
  • If the commodity breaks above its 2016 high (1,380 used as a trigger, just above the 2016’s high), outlook will shift to bullish.
  • If the commodity breaks below the lower boundary of the horizontal trading channel (using 1,300 as a trigger, just below the support of the channel), outlook will shift to bearish, at least in the very short-term

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
2 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 5 (2 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.7 stars on average, based on 10 rated posts




Feedback or Requests?

Continue Reading

Recent Comments

Recent Posts

A part of CCN

Hacked.com is Neutral and Unbiased

Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

Trending