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Factors Driving Increased Demand for Palladium?

In every long-term bull market, there is always a sector that underperforms. One of the biggest bow-wow commodities right now just happens to be palladium. Palladium is a precious metal, the primary use of which is in automobile catalytic converters. A more recent source of burgeoning demand has been in the jewelry market. Asian jewelers in particular are using palladium in lieu of the far more expensive platinum. Because it’s cheap, cheap, cheap. We are in a long-term global commodity bull market, and palladium will participate. The macro drivers for sustained demand for palladium are well-entrenched.

The Chinese are in the massive process of transitioning from a bicycle nation to a car nation. Chinese consumers purchased more than seven million cars last year, up 25% from the year before. In fact, it’s estimated that by 2015, China will eclipse the United States as the world’s largest car market.

China and India’s growing car market, along with Chinese consumer demand for palladium jewelry, as well as the growth in Western demand for autos all appear to be setting the stage for a multi-year run in palladium prices.

The market is giving us a chance to get into palladium cheaply. The same way it gave us the chance to buy the Copper stocks, Zinc stocks, Oil Service stocks and Aluminum stocks cheaply in the past.

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