Byron King

It’s a whitish, ductile metal — No. 46 on the periodic table and part of the platinum group.

People use this material as a catalyst, mostly in reactions involving hydrogen. If you drive a diesel-powered car or truck, you’re sitting on some of it. And it’s a “buy.”

Where are we going with this? Let’s start over 200 years ago, with one of the men who founded the Harvard Law School.

Joseph Story (1779–1845) was born during the American Revolution, and came of age in the early years of the new United States of America. He was a scholar of the U.S. Constitution, and, as I mentioned, eventually helped found the Harvard Law School.

In 1811, Story was appointed to the Supreme Court by President James Madison — who knew a few things about the U.S. Constitution, in that he helped write it. Story was a contemporary of another famous member of the Supreme Court, Chief Justice John Marshall (1755–1835).

In 1833, Justice Story published a study titled, Commentaries on the Constitution of the United States. In a discussion of the Second Amendment, Story stated:

The right of the citizens to keep and bear arms has justly been considered, as the palladium of the liberties of a republic; since it offers a strong moral check against the usurpation and arbitrary power of rulers; and will generally, even if these are successful in the first instance, enable the people to resist and triumph over them.

These days the Second Amendment makes for another discussion. My point is that I like Story’s use of the word palladium.

That is, in modern usage, the word palladium identifies something on which the safety of a nation is believed to depend. It’s a supreme safeguard.

The Palladium Play

I like the idea of palladium, both in the intellectual-legal context, and as a metal on which to base an investment-themed idea, appropriate to this newsletter.

So let’s return to palladium metal, which I began to describe at the beginning of this article. Palladium is part of the platinum group, as I mentioned, and indeed, palladium is often mined together with platinum.

Let me restate another point, from above. In terms of investment, right now, palladium appears to be a palladium of investment opportunity.

First, let’s look back. Here’s the five-year price chart for palladium.

As the chart indicates, palladium prices crashed in the 2008 meltdown. Then things recovered steadily for about two years. Palladium pricing was strong into 2011, but weakened near the end of that year and languished all through 2012.

What was the problem for palladium last year? Basically, weak palladium demand and pricing had to do with overall industrial weakness in the European Union, North America and Japan, particularly in their respective auto sectors.

The fact is that palladium is used mainly in automobile and truck catalytic converters, particularly for low-temperature exhaust, specifically from diesel engines. For high-temperature exhaust from gasoline burners, you need platinum. But for diesel engines, palladium will do fine. That’s why I stated, above, that you may be sitting on palladium if you drive a diesel-powered vehicle.

Looking ahead, the auto sector is recovering in Europe, North America and across the developing world. Automakers have scheduled their production runs, and what’s the fastest-growing kind of vehicle? Diesel-powered. I could give you all manner of support for this, from a wide variety of auto-sector analysts, but I want to stay focused on the palladium angle here.

Suffice to say that world industrial demand for palladium is growing strongly, what with the use of the metal in diesel engine catalytic converters. Meanwhile, mine output of palladium is stagnant, while global stocks — primarily from Russia — are as tight as banjo strings.

Let’s cut to the chase. We’ve got a metal play here. Demand for palladium has been stagnant for over a year, but now is growing. There’s not enough new palladium mine output (plus recycled metal) to meet the need. So how can you invest in palladium?

There are two ways to play it. One, which I’ve already tipped my readers, is to own a company that mines the metal. The big players here are in South Africa – and yes, there are risks associated with mining and in particular mining in South Africa.

But today I’d urge you to look towards a different way to play palladium. For today’s purposes, I suggest you own palladium that’s already gone through the mine, mill and refinery. That is, own physical metal — ingots of palladium.

By understanding what’s going on with the world’s palladium markets, you’re way ahead of a looming shortage and price increase. We could see substantial gains in palladium over the next two years, which makes this — as Joseph Story might have said — a “palladium” of investment opportunity.

That’s all for now. Thanks for reading.

Byron King

Original article posted on Daily Resource Hunter 

Byron King

Byron King is the editor of Outstanding Investments, Byron King's Military-Tech Alert, and Real Wealth Trader. He is a Harvard-trained geologist who has traveled to every U.S. state and territory and six of the seven continents. He has conducted site visits to mineral deposits in 26 countries and deep-water oil fields in five oceans. This provides him with a unique perspective on the myriad of investment opportunities in energy and mineral exploration. He has been interviewed by dozens of major print and broadcast media outlets including The Financial Times, The Guardian, The Washington Post, MSN Money, MarketWatch, Fox Business News, and PBS Newshour.

Recent Articles

Got Tech Stocks? Sell These Flops Now…

Greg Guenthner

The latest victim of the crude rout is none other than the stalwart tech stocks. These are the go-to trades that have held up all year long. I'm talking about stocks like Google, Yahoo! and Microsoft. Like I said before, these aren't no-name stocks you're seeing drop more than 10% from their highs last month.


Three Time Bombs in Your 401(k) and How to Disarm Them Now

Dave Gonigam

By the time you do… Kaboom! It’s too late. They’ve already blown up your retirement. There are three time bombs the mutual fund industry has planted within your 401(k). By the time you’re done with this article, you’ll know how to identify them. And, more importantly, how to disarm them. Dave Gonigam has the scoop...


A Strong Dollar’s Not All That Bad

James Rickards

On the eve of the FOMC’s meeting announcement, our CIA financial strategist suggests, “To beggar thy neighbor or not… that is the question.” Read on to find out why having a strong dollar is good for you, but not so good for the Fed...


The Great Unraveling of the Commodities Super Cycle

Greg Guenthner

There's an entire parade of metals and energy plays running off the side of Commodity Mountain like a herd of lemmings. Gold cracked $1,200 after a $30 drop. Silver cratered more than 5% on the day. Copper fell another 2% Natural gas is down. Heating oil is down. Oh, and our main culprit, oil, coughed up another 4%. And that's just yesterday's losses...


Same Currency War, New Battle Phase

James Rickards

The current global currency war started in 2010. Our own Jim Rickards published his book, Currency Wars, soon after that. One of the points that he made in the book is that the world is not always in a currency war. But when we are, they can last for a very long time. They can last for 5, 10, or 15 years, sometimes longer. Read on to learn the latest battle phase of the current currency war...