Chart of the week: palladium hits another high

Onwards and upwards. Palladium hit another record high this week, with the spot price reaching $1,700 an ounce. It has gained a third in 2019 alone.

The metal is used mainly in catalytic converters for petrol engines. Global car sales have dipped, but demand is climbing steadily owing to tougher emissions standards in China, while a shift from diesel to petrol cars in Europe following the furore over diesel emissions  is also bullish.
Meanwhile, supplies, which stem largely from South Africa and Russia, are not expected to increase this year, notes Henry Sanderson in the Financial Times. The rally looks set to endure, although concern over global growth and intensifying trade tension is likely to cause setbacks.
“Central bankers seem… flustered. Much like a long-haired Persian cat standing backwards to the wind…[it’s reminiscent] of 1927 when financial pressures where mounting following the late 1925 peak in the Florida real-estate boom, which was then devastated by the horrendous hurricane that arrived on 18 September 1926. With winds as high as 150mph, the property devastation if it hit today would be in the order of $250bn. This, with the brief recession that ran from October 1926 to November 1927, prompted the Fed… to be exceptionally easy. Indeed, in July 1927 Ben Strong, chairman of the Fed, quipped to a French central banker that he was going to provide “a coup de whiskey to the stockmarket.”… It was an example of the Fed’s ease for the wrong reasons during yet another classic financial bubble. And it all turned out to be a coup manqué. The bigger the boom, the bigger the bust.”
Bob Hoye, Halkin Services

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