More mileage in palladium

Palladium prices jumped by a fifth in 2016, and they have made a solid start to 2017, reaching a near-two-year high of almost $800 an ounce last week. And there may well be further to go.

The metal is a key component in catalytic converters, and the car industry accounts for80% of demand, notes Ira Iosebashvili in Barron's. China and the US use palladium in catalytic converters; Europe favours platinum.

Both US and Chinese car sales have been solid of late, with the latter rising at their fastest pace in three years last year and the former potentially set for another boost thanks to President Trump's fiscal stimulus. China's pollution problem is forcing it to tighten car emission standards, adds Chen Lin on Equities.com, which implies a steady rise in demand for palladium over the next few years.

Start your trial of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

On the supply side, South Africa, the world's top supplier, is not expected to increase mined output much. Analysts reckon that dwindling sales from Russia's stockpiles means they are probably nearly depleted. TD Securities thinks the market deficit could double this year.