Palladium Is Widely Used, Similar to Platinum and A Lot Cheaper than Gold & Platinum Group Metals (Rhodium) so Bullion Investment Should Increase; 2011 Production Down 5.4% but Automotive Demand Up 6.7%

Palladium is a widely used durable and versatile metal. Though useful in plating jewelry, clothes fasteners and engines systems (aircraft and automotive) its main uses are as a catalyst (mainly catalytic converters, useful due to its light weight, high boiling point, is an oxidizing agent) and in electronic applications where it is the preferred metal for plating electrodes used in capacitors (used either alone or in conjunction with silver); The only alternative to palladium is nickel but nickel has its limitations, it can only be used in less demanding applications. In automobile circuits palladium holds silver plated conductive tracks in place. (Platinum today: Electric Components) Some types of jewelry prefer palladium to gold/platinum for reasons which include color (44% whiter than platinum), weight (38% lighter than gold), hardness (harder than gold meaning even at high purity it is more resistant to scratches), and price (cheaper than gold and platinum). Even with those advantages, in jewelry it is used mostly just as a hardening agent alloyd with Gold (white gold can't be made without platinum group metals like palladium which is notable considering that white gold is gaining popularity particularly among brides preferring white gold wedding rings). The rising popularity of fuel cells could also hike up the price of palladium because fuel cells require catalysts and palladium is a lot cheaper than its alternatives (about 3X less than either rhodium or platinum).

The process of transforming yellow gold to white gold is made easier when gold-palladium alloys are used (highly soluble in one another). Palladium is also used to purify hydrogen gas because when heated, the metal allows hydrogen to diffuse through it, a process that's made easier by the metals' high melting point. Other info: One of its earliest discoveries was made by the Spanish when they mined for silver in Colombia. Palladium was first isolated by WH Wollaston in 1803, at the same time he discovered Rhodium. As recently as 2000 concerns regarding the lack of palladium supply drove up the price

Most of its demand comes from catalytic converters where it acts as a catalyst, stimulating an oxidation reaction that converts toxic combustion byproducts into carbon dioxide and water (reduction of NO to O and N is by rhodium). Palladium accounts for 90 to 95 % of precious metals used in gasoline catalytic converters. Each catalytic converter uses 4 grams of palladium and platinum. (businessweek.com: Palladium Rising 15% as Russian Shipments Drop) As a bullion investment, palladium has yet to reach the popularity of platinum and gold but that's bound to change given the near record high spot prices for platinum, gold and rhodium and that palladium remains only one of four metals to have an ISO currency code (XPD). Palladium shares many characteristics with platinum, not surprising given that palladium is one of six transition metallic elements comprising the Platinum Group of the periodic table. The other four are rhodium, ruthenium, osmium and iridium. Among their similarities: all are great catalysts, are hard metals making them resistant to scratches. They also have high boiling points and are noted for their electrical properties.

Annual palladium production is about the same as it is for platinum (6M ounces) which is less than a tenth of gold production. All the palladium ever extracted amounts to only about 1/12th that of gold.
September 2011: HSBC, the world's #2 bank outside China, raised its 2012 price forecast for palladium by 8% to $810/oz citing the fact that demand will outstrip supply (in stark contrast to the previous two years). Long term price forecast raised by 21% to $850/oz.

South Africa is home to some of the biggest platinum-palladium mines in the world (namely Bushveld Igneous Complex); In 2008 South Africa produced 80% of the world's platinum (4.725M ounces). (South African PGM Platinum Group Metals Stock) Bullion palladium is the best way to take a long position on the metal (physical investments).
More Reason To Like Palladium: Shipments to Switzerland (1 of only 2 main hubs in Europe for storage of the metal) from Russia (world's largest primary producer of palladium) are down to 500,000 ounces in 2010 (average 1.3M ounces for the last 20 years); The main reason for the decline is that Russia's four big palladium mining companies have depleted mines (the largest of them, OAO GMK Norilsk Nickel is expected to be deplete of palladium by 2012). For 2011 mine output is forecast to fall by 5.4% to 6.8M ounces even though demand from carmakers alone will increase 6.7% to 5.5M ounces. Russian stockpiles form the fourth biggest source of palladium supply.

If you wanted to invest in a company here are a few to keep in mind:

North American Palladium (tsx:PDL, amex:PAL) (41% fall in stock price over last 12 months means it has a high beta value) - The company is Canada's only primary palladium producer. Flagship mine is in N.Ontario (Lac des Iles) which is currently (October 2011) undergoing expansion. Production is on track to reach 250,000 ounces per year by 2015 at a cost of $200/oz (relatively low). First phase of project will begin producing the end of 2012. 2012 production at LDI is expected to be in the range of 190-200,000 ounces. The company's other mine (Vezza) is part of its gold division and is located in Quebec. The sleeping Giant has very high cast costs (over 1550/oz) because ore grades have been low (but will climb due to deeper access later on). Sleeping Giant was acquired in 2009 from iamgold (expected to produce 40-50,000 ounces in 2012). (Miningweekly: NAP expects palladium output to rise 75% this year) Total palladium production by NAP was 95,100 ounces in 2010 but is forecast to increase by 75% in 2011 to 165,000 ounces. The company eyes annual production of 250,000 ounces by 2012. The cost to expand shaft 1 at Ile de Lac is $250 million. NAP has operated in Thunder Bay for over 17 years. Overall production costs for NAP are forecast to drop to $125/oz from $325/oz in 2009 (60% decrease). (ThunderBaybusiness.ca: North American Palladium Mine Celebrates Reopening)

Between November 2010 and February 2011 North American Palladium stock increased by 51% on the back of higher palladium prices (week of January 30,2011 spot price was above $800/oz).

Anooraq Resources - Has the 3rd largest platinum group metals resource in South Africa. It's listed in both the US & Canada, produces all six platinum group metals & mines in South Africa's biggest platinum resource area (Bushveld Igneous Complex). It assumed control of the Bokoni mine on July 1, 2009.

Other palladium companies: Platinum Group Metals Ltd, Stillwater Mining, Anglo Platinum.
The world's main producer of palladium, b>Russia's Norilsk produced about 2.7M ounces of palladium in 2010, with a 10% decline in just three years due both to mine depletions and a shift by the company over to nickel rich ore from the cuprous type at the expense of its platinum metals group producing Polar Division (Norilsk wants to raise nickel production and cut production costs a lot of which come from mining cuprous ore). Though there has been some increase in cuprous ore mined (up 42.7% since 2005 up to 5236 metric tonnes in 2009) a natural increase there was expected given that palladium grades are lower a direct result of mine depletion (since 2005 palladium production by Norilsk is down 14.6% even though it extracted 42.7% more platinum rich cuprous ore). Platinum production by Norilsk is around 800,000 ounces.