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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: yard_man who wrote (5713)1/21/2004 6:01:00 PM
From: mishedlo  Read Replies (1) of 110194
 
from Dan on my FOOL board
Palladium is a platinum-group metal and they are pretty close substitutes.

The major source of palladium is Russia. Russia has often tried to control prices of platinum and palladium. Although the price of palladium has usually been lower than platinum, the relative amounts are inverse - palladium is more scarce, and so it's easier to manipulate its market than the platinum market.

Several years ago, major users of platinum (mostly auto makers for catalytic converters) switched to palladium for cost savings. Russia picked up on it and restricted supply, sending its price over $1000 an ounce. This made platinum more attractive, so they switched back.

Now with prices where they are, they'd probably like to switch back to palladium, but they also don't want to get taken by the Russians again. So I think it'll take a while.

By the way, on a fundamental basis, I'd stay away from Stillwater (SWC), even though it is now majority-owned by the Russian company Norilsk. Their management really stinks, the mines have major safety concerns, and the environmental climate in Montana is pretty anti-mining right now. PAL is a better bet, in my opinion - and a purer one on palladium (SWC has more significant residual platinum production than PAL).

dan
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