For those in the realm of precious metals investing, 2024 is shaping up to be a year of potential growth and opportunities. Analysts have been closely monitoring the recent downturn in palladium prices, which has raised questions about the future trajectory of this silvery-white metal. In this blog, we will dive into the current palladium market dynamics, with a focus on New Age Metals’ 100% owned River Valley Palladium project, located just 100 kilometers away from Sudbury, Ontario. Additionally, we’ll discuss some potential factors that shareholders of New Age Metals may eagerly anticipate.
Palladium’s Recent Performance
Palladium prices have recently experienced a significant dip, plummeting below the $1,000 per ounce mark for the first time in half a decade. This decline occurred despite reports of sanctions imposed on Russia’s largest precious metals refinery. Daniel Ghali, Senior Commodity Strategist at TD Securities, noted that even as palladium forwards were aggressively borrowed, its price action seemed “almost extreme.”
Ghali further explained that while palladium has reached its lowest price since 2018, there may still be room for further downward movement. The market timing signal suggests a continued downtrend, even as prices approach the psychologically important $1,000/oz range.
TD Securities change detection signal. Source: TD Securities
Weakness in Palladium and Its Implications
Commerzbank analysts also observed the weakness in palladium prices, emphasizing that the metal has experienced nearly a 15% drawdown since the start of the week. This decline is attributed to an expected decrease in demand from the automotive industry, which historically accounts for nearly 85% of palladium demand.
Interestingly, palladium is currently (November 16th 2023) only $100 more expensive than platinum, a remarkable shift from a year ago whe n palladium commanded a premium of over $1,000 over platinum. This narrowing price differential could impact the substitution effect in the automotive industry in the coming year.
Anticipating a Recovery
Despite the extended weakness and persistent selling, some analysts anticipate a recovery for both palladium and platinum in the near future, as they are currently showing signs of being oversold. Fundamentals in palladium are tightening up, with indications such as rising sponge premiums and a slightly steeper forward curve.
Nicky Shiels, metals strategist at MKS PAMP, highlighted that the physical tightness in the palladium market stems from UK sanctions on a Russian refiner, Krastsvetmet JSC. This situation could lead to “fear hoarding” if the U.S. follows suit, potentially further impacting prices.
Palladium: A Promising Opportunity
In conclusion, the palladium market presents an intriguing landscape for investors, with the potential for both challenges and opportunities. As analysts closely watch the market dynamics, it’s worth noting that palladium remains a key player in various industries, including automotive, electronics, and renewable energy.
For shareholders of New Age Metals (TSXV:NAM | OTCQB:NMTLF), the future holds promise as the company’s River Valley Palladium project, strategically located near Sudbury, Ontario, enters the spotlight. Regardless of the volatility in palladium prices, the company’s commitment to the development of the multi-million ounce project remains steadfast. The Company is diligently following up on recommendations of the 2023 Preliminary Economic Assessment, including the study to determine if PLATSOL technology can be pioneered at scale for palladium recoverability at River Valley.
As we navigate the intricate world of precious metals, including palladium, the key takeaway is that opportunities may arise when least expected. Shareholders and investors in New Age Metals, with its ambitious project and strategic location, have reason to remain optimistic about the future and the potential rewards that await them.