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Precious metals offer the investor the opportunity to possess real physical metal in the form of bullion bars or rounds. Bullion is readily available from the precious metals of gold, silver, platinum and now, palladium. The purchase price of bullion from reputable dealers is normally on a spot plus basis, that is, the current market spot price of the metal plus the dealer markup or transaction fee. When the investor wishes to sell the bullion, the bullion dealer will purchase it back, again at spot. A transaction fee may apply.
 Palladium
bullion is readily available for purchase from many online
sources. As with other forms of precious metal bullion, ownership
of palladium offers the similar investment opportunities as
the better known gold or silver.
The highest refined purity palladium available is refined
by Johnson Matthey from ore mined by the Stillwater Mining Company.
Regarding palladium markets, Johnson Matthey, in their 2004 Annual Platinum Review, offer this assessment:
For palladium, however, it was (and is) harder [than platinum] to make a bullish case for investment based on the metal’s fundamentals. The market has been in a position of oversupply since 2001. Supply will continue to grow strongly from the expansion of pgm mining in South Africa and from increased recycling of autocatalysts and electronic waste. Even with the most optimistic projections for autocatalyst, electronic and dental demand, the palladium market appears set to remain in substantial surplus. Nevertheless, as the price of platinum climbed in 2003, fund managers increasingly inferred that the differential between it and the price of palladium would become unsustainably large. With the risk of a downward correction in the platinum price considered small, due to the metal’s strong fundamentals, the conclusion was that the price of palladium would almost certainly have to rise.
In addition, the platinum and palladium markets are very small compared with other commodities, and are minute compared with equity, fixed income or foreign exchange markets. Consequently, significant activity by hedge funds can move the price in either direction regardless of the fundamentals. Furthermore, price trends can rapidly become self-sustaining as funds that trade on momentum or technical indicators are drawn into the market.
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