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Palladium Stocks To Buy

While gold and silver have done very well over the past few months as recession fears continue to grow, it's easy for investors to overlook opportunities in other precious metal markets. The first that comes to my mind is palladium, which in the first quarter of 2019 saw prices jump to $1,560 per ounce before crashing back down to the $1,300 price range shortly after.

palladium stocks to buy

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While many called this the end of the palladium bubble, the reality is that the precious metal has come back stronger than ever, surpassing the price of gold yet again. Prices have set a new all-time record, climbing above $1,600 per ounce.

Unlike gold and silver, which don't have much industrial demand besides being used in jewelry, palladium's demand also comes from its use as a material in catalytic converters for gasoline engines. With over half of the global palladium demand originating from this key car component, prices are expected to continue to rise as companies pursue more environmentally friendly solutions, both in the automobile sector and elsewhere.

There's a strong case to be made that palladium miners might be in a better long-term situation than some of their rivals who focus on gold, silver, or platinum. With this in mind, here are two palladium producers that I'd argue are among the best stocks in the sector.

With a market cap of about $720 million, North American Palladium (PALDF) is a pure-play palladium stock that is up more than 60% so far since the beginning of the year. In March, when palladium prices first peaked, the stock had shot up to nearly $20 per share, more than doubling from where it started 2019, before tumbling back down. While this short-lived meteoric rise might have been fueled, more than anything else, by the excitement at the time surrounding palladium, North American Palladium's long-term potential remains excellent.

The company owns just a single mining asset, the Lac des Iles mine in Ontario, Canada, which has seen considerable growth in the past few years. Over the past quarter, the facility produced 56,121 ounces of palladium, giving the company a record-setting quarterly revenue. Annual output ran at about a 237,000 ounce rate. Net income came in at $28 million, a roughly 160% increase from the $10.8 million reported during Q2 2018.

Estimates on the mine's palladium reserves have been updated, with previous figures suggesting that the Lac des Iles mine had 36 million metric tons of ore. However, data from the company suggests that this figure could be as high as 40.9 million metric tons, further extending the lifecycle of this mine, which is the lifeblood of the company.

Overall, North American Palladium expects an average all-in sustaining cost (AISC) -- a key measure of a project's overall expenses -- to come in at $834 per ounce of palladium. Considering that the precious metal is trading at $1,600 per ounce, it's easy to see how the company could be set for significant growth as production rises and expenses continue to fall. To top it all off, North American Palladium has kept its balance sheet clean and is currently debt-free, except for capital leases.

While its name might indicate otherwise, Sibanye Gold (SBSW -0.60%) is one of the world's largest palladium producers with an annual output of 154,000 ounces. Most of its production comes from palladium assets it acquired in the buyout of the Stillwater Mining Company, a Montana-based producer that's historically been the largest palladium miner in the U.S.

A large-cap miner worth $12.1 billion, Sibanye Gold has seen its shares surge by more than 70% since the beginning of 2019. Most of the palladium production that it inherited from Stillwater is split between two underground mines in south central Montana that also produce other precious metals such as platinum.

While the company might technically produce more gold then palladium thanks to its South African projects, it's the company's palladium-focused assets that have seen the most growth recently. According to the company's integrated annual report, adjusted EBITDA for its palladium-producing U.S. Stillwater facilities grew from $161 million in 2017 to $314 million in 2018, with figures expected to reach $400 million to $500 million in 2019 should palladium prices remain strong. At the same time, Sibanye Gold's palladium segment is the most profitable of all its operations, with an adjusted EBITDA margin of 26% in comparison to a 19% margin for the gold-focused South African project.

Investors can find comfort knowing that the Sibanye Gold is diversified mainly between two very well-performing precious metals, palladium and gold, and isn't focused just on a single mine or facility to generate revenue.

In fact, commodity stocks are one of the few sectors with momentum right now. With inflation heating up, investors are looking to unload risk. And when this happens, the most significant moves often happen in energy stocks and commodities like precious metals.

Investing in 2022 has been a challenge so far. Previous strengths like growth stocks and tech look weak, with bond yields rising. That said, if you started investing after 2020, you might want to buckle up. It could be a bumpy ride.

As governments and the private sector work together to promote less pollution, palladium is becoming a key material. That said, here are the top five palladium stocks set to benefit from higher prices.

Headquartered in South Africa, Anglo American Platinum is the largest global producer of platinum. As a result, the company is also one of the largest palladium producers. In fact, the mining company has three segments: Platinum Group Metals, Base Metals and Precious Metals.

Despite several obstacles causing mine closures, this palladium stocks company is achieving record growth. In the first half of 2021, Anglo reached a record EBITDA of over R108 billion. Not only that, but the company offers an attractive 9% dividend yield.

Based on their Q2 2022 financial reports, they are not currently profitable. But, with certain big players such as Norilsk Nickel not trading anymore, this leaves room for others to step in. This is certainly a palladium stock to watch in the coming years.

Formerly known as Sibanye Gold, Sibanye Stillwater continues its aggressive growth, becoming a global leader in precious metals production. That said, the firm has a diverse portfolio, including gold, platinum, palladium and other PGMs.

That said, the firm is using the excess cash to pay down debt and pay dividends with over a 10% yield. With a diverse portfolio and solid revenue growth, Sibanye Stillwater is certainly a top palladium stock.

Palladium is most useful in catalytic converters, something EVs will not need. Taking this into account, the metal prices could drop in the coming years. That said, the top palladium stocks going forward will have portfolios diversified with other precious metals.

Palladium is a chemical element with symbol Pd and atomic number 46. It is a rare and lustrous silvery-white metal discovered in 1803 by William Hyde Wollaston. He named it after the asteroid Pallas, which was itself named after the epithet of the Greek goddess Athena, acquired by her when she slew Pallas. Palladium, platinum, rhodium, ruthenium, iridium and osmium form a group of elements referred to as the platinum group metals (PGMs). These have similar chemical properties, but palladium has the lowest melting point and is the least dense of them.More than half the supply of palladium and its congener platinum is used in catalytic converters, which convert as much as 90% of the harmful gases in automobile exhaust (hydrocarbons, carbon monoxide, and nitrogen dioxide) into less noxious substances (nitrogen, carbon dioxide and water vapor). Palladium is also used in electronics, dentistry, medicine, hydrogen purification, chemical applications, groundwater treatment, and jewelry. Palladium is a key component of fuel cells, which react hydrogen with oxygen to produce electricity, heat, and water.Ore deposits of palladium and other PGMs are rare. The most extensive deposits have been found in the norite belt of the Bushveld Igneous Complex covering the Transvaal Basin in South Africa; the Stillwater Complex in Montana, United States; the Sudbury Basin and Thunder Bay District of Ontario, Canada; and the Norilsk Complex in Russia. Recycling is also a source, mostly from scrapped catalytic converters. The numerous applications and limited supply sources result in considerable investment interest.

Palladium is a lesser-known option for precious metals investors compared to gold and silver. Recently, however, growing demand and a supply deficit have driven interest in ways to invest in palladium.

Coming in a close second is Russia, which is the source of 40 percent of global mined palladium supply. Russia's ongoing war in Ukraine has placed it at the other end of the sanctions sword as the world's leaders try to force President Vladimir Putin to end the bloodshed. In April 2022, bourses in London and Chicago suspended two state-owned Russian refiners from their goods-delivery and sponge-accreditation lists.

1. Ways to invest in palladium: ETFs Palladium-backed exchange-traded funds (ETFs) track the precious metal like an index fund, but trade like stocks on an exchange. Examples of palladium ETFs include the Sprott Physical Platinum and Palladium Trust (ARCA:SPPP) and the Aberdeen Standard Physical Palladium Shares (ARCA:PALL).

The Sprott Physical Platinum and Palladium Trust ETF was created to invest and hold substantially all of its assets in physical palladium and platinum bullion. It currently holds nearly 47,000 ounces of palladium and over 61,000 ounces of platinum. The portfolio is held in custody at a federal crown corporation of the Canadian government.

For its part, the Aberdeen Standard Physical Palladium Shares is designed to track the performance of the palladium price, less expenses. It holds over 204,000 ounces of palladium in London at a secured vault belonging to JPMorgan Chase & Co. (NYSE:JPM). 041b061a72

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