Palladium: The Silent Champion
"Great things are not done by impulse, but by a series of small things brought together." ~ Vincent Van Gogh, 1853-1890, Dutch Painter
While we remained bullish on the precious metal's sector when it took a beating towards the end of 2008 to early 2009, instead of pushing Gold or silver our main focus was on Palladium. The reason, it was the single most ignored precious metal out there. Mass psychology dictates that when a market has taken a massive beating, makes for a good investment and is being completely overlooked by the masses, the astute investor should aggressively start building up a position. When it was trading close to its lows, we even stated that it made for a better opportunity than Silver (that advantage is now over). This position appears to have paid off for Palladium has outperformed all the precious metals; from low to high Palladium tacked on over 155% making it the best performing precious metal in the past 12-13 months. From low to high Silver tacked on 120% and Gold from low to high tacked on roughly 80%.
Palladium has tested the 180 price point level several times over the course of the last 6 months and to date this zone has held and in doing so has flashed several very strong positive divergence signals, and two long term buy signals. From a short term and 3-6 month perspective, one can expect the action to remain very volatile, but from a 1-2 year perspective, Palladium is trading at an insanely cheap level; investors will only realise this later, but by then it will be too late to act.
Palladium is a very volatile metal and when it moves the moves are usually explosive in nature; this downward move has created an unbelievable long term buying opportunity for all those who failed to open up long positions in bullion when it was trading at these levels from Oct 2004 to July 2005.
On the short to intermediate time frames, palladiums strength will be determined by how it responds to the corrections in the Gold and Silver markets. If during this corrective phase Palladium can hold above 180 even if Gold trades down to the 720-750 ranges, then it would be very strong sign that an explosive move upwards is not too far off in the makings. Expect this market one day to move in bursts of 30-50 dollars a day. If you have no position in bullion, now would be a great time to add to your positions and continue to add to them on all pull backs. Market update March 10, 2009
We also published the above info publicly on the 30th of March 2009 Full article. Almost everything that was stated in the article has come to pass.
It is also the only precious metal that did not immediately pull back when the dollar started to rally this year. For awhile it actually traded in tandem with the dollar and went on to put in a several new highs before pulling back.
We made the following comments on Jan 5th, 2010 to our market update subscribers.
Having traded past 400 on a weekly basis, it could potentially spike to 450 before pulling back. Focusing on the short to intermediate term time frames, Palladium is now overbought, and so it is ready for a pullback. Now is not the time to open up new positions. If you have no positions wait for a strong pull back before deploying new money into this play.
It subsequently traded to and surpassed the 450 mark. The next step now is for a pullback as Palladium has mounted a very strong rally and once the correction gathers steam we will be in a better position to determine which precious metal will be the next top performer. A break below 420 for 3 days in a row should take it down to the 380 ranges. A weekly close below the 350-360 ranges has the potential to take it down all the way to the 280-300 ranges; this is also roughly the zone the main uptrend line runs through.
From a long term perspective, all strong pull backs in the precious metal's sector (Gold, Platinum, Palladium and Silver) should be viewed as buying opportunities.
"Keep away from small people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great." ~ Mark Twain, 1835-1910, American Humorist, Writer