How to invest in palladium

Palladium ETFs are a newcomer on U.S. stock exchanges, and they could help drive up investor demand for palladium.

Since it doesn’t end up in the news very often, individual investors rarely look to palladium as an investment option in the precious metals field. That could change in the coming year as 2010’s return on palladium (+83 percent YTD) has out-paced gold (+24 percent), silver (+71 percent) and platinum (+16 percent YTD).

Why the spike in palladium?

Of the big four precious metals (gold, silver, platinum and palladium), platinum and palladium are closely tied to economic development. Since both metals are used extensively in the production of catalytic converters for automobiles, they do well when economies are expanding (think China and India). Palladium could also see increased investor demand thanks to new ETFs and plans by the U.S. Mint to start producing American Eagle palladium bullion coins.

How can I invest in palladium?

There are a handful of ways to legitimately (and fairly safely) invest in palladium:

  • Buy palladium bullion coins
  • Buy stock in a palladium ETF (exchange-traded fund)
  • Buy stock in a palladium mining or palladium recycling company

Where can I find palladium bullion coins?

U.S. President Barack Obama signed a bill into law on Dec. 14, 2010, that would “authorize the production of palladium bullion coins” by the U.S. Mint. No word yet on when the palladium bullion coins will hit the market. Expect them to be a hot commodity, though, if for nothing else than owing to their scarcity.

After being discontinued in 1999, the Canadian Mint started producing its Palladium Maple Leaf one-ounce palladium bullion coin again in 2005. Individuals cannot purchase coins directly from the mint, but Canadian palladium bullion coins are available through coin dealers and occasionally on auction sites like eBay. Still, they’re difficult to find.

Other palladium bullion bars and coins from countries like Switzerland, China, Russia and France are available on various web sites and via coin dealers. Make sure you FULLY understand what you’re buying before you try to acquire these coins or bars.

Palladium ETFs

Palladium ETFs are a newcomer on U.S. stock exchanges. There are currently two palladium ETFs on the NYSE that I’m aware of:

  • ETFS Physical Palladium Shares (NYSE:PALL): A palladium ETF that looks to match movements in the palladium spot price minus fees
  • ETFS White Metals Basket Trust (NYSE:WITE): A physical silver, platinum and palladium ETF that started trading on Dec. 3, 2010

Finding the best palladium stocks

Palladium mining stocks operate in a small niche. Most of the world’s palladium deposits are concentrated in just four countries: Russia, which produces 44+ percent of the world’s palladium, South Africa, which produces 40 percent, Canada, which produces 6 percent and the U.S., which produces 5 percent.

The biggest deposit in the U.S. is concentrated in the Stillwater igneous complex in Montana (incidentally the home state of Rep. Dennis Rehberg who introduced the American Eagle Palladium Bullion Coin Act of 2010). Stillwater Mining Company (NYSE:SWC) is an obvious candidate for buying a palladium stock. Stillwater’s shares are up 116 percent YTD.

Here are some palladium stock suggestions for further research as we move into 2011:

  • North American Palladium Ltd. (AMEX:PAL), +89 percent YTD
  • Noril’skiy nikel’ GMK OAO (PINK:NILSY), +64 percent YTD
  • Anooraq Resources Corporation (AMEX:ANO), +66 percent YTD

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Palladium Image Source: http://images-of-elements.com/palladium.php

U.S. gets first gold bullion bar ATM in Boca Raton

Shares of the parent company for PMX Gold, PMX Communities, Inc. (OTC:PMXO), shot up 30 percent on yesterday’s news that a gold bullion bar ATM opened in Boca Raton, Fla.

Buy gold bullion barsBoca Raton – long a bastion for moneyed, elbow-patch-wearing New Yorkers who winter on the Florida coast – has taken the curtain off the United States’ first gold-dispensing ATM. The “Gold to Go ATM” was officially unveiled yesterday in an opening ceremony at the Town Center Mall in Boca Raton at 10 a.m. EST.

“Boca is for the rich and famous,” Glen Calder, a PR rep for PMX Gold, the Boca Raton company that will operate the machines, told the Palm Beach Post. “The Town Center Mall is where a lot of people go to spend a lot of money. It’s a good fit.”

Feed the ATM cash or a credit card and you can get gold bullion bars or gold bullion coins in return. Prices on the gold are updated every 90 seconds to ensure the company doesn’t lose money against current spot prices on the yellow metal. Shares of the parent company for PMX Gold, PMX Communities, Inc. (OTC:PMXO), shot up 30 percent on yesterday’s news, and it sounds like this ATM could be the first of many in South Florida.

“PMXO previously entered into a preliminary agreement for the purpose of developing proposals for licensing and franchise agreements for German engineered, unmanned point-of-sale technology and to conduct exclusive test marketing in the State of Florida,” said Michael Hiler, the Company’s President and CEO, in a press release. “Since that time, we have secured prime, high traffic retail mall space, obtained legal advice regarding exemption from Florida state sales tax issues, acquired newly minted Credit Suisse .9999+ pure gold bars and developed the initial infrastructure to commence retail Gold Bullion sales. Upon satisfaction of final equipment testing and security details, we plan to start operations.”

Despite its boring name, the Town Center Mall seems like a good place to test out gold ATMs. It plays host to just about every opulent store you could expect to find in Beverly Hills or South Beach: Cartier, Bvlgari, Tiffany & Co., Burberry, Armani Exchange, Neiman Marcus, Coach, LaCoste, Louis Vuitton, etc., and – perhaps more importantly – it doesn’t cater to the type of clientele that might try toss the ATM in the back of their pick-up trucks. No word yet on whether or not silver ATMs are in the pipeline.

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Insider gobbling up American Apparel (APP) stock like candy

It’ll take lower unemployment and a hell of a lot more insider buying to save American Apparel. But if there’s one thing the company’s good at doing it’s defying expectations.

After Thursday’s regulatory filing revealed that American Apparel founder Dov Charney bought up $1.5 million+ in his company’s stock (AMEX:APP), shares caught fire on Friday. They were up up 10.3 percent in a day on heavier than usual volume. All told, the controversial Charney purchased 1,129,576 shares of common stock at $1.48 per share, according the L.A. Times.

That news came just a day before investors learned that consumer spending was up 6 percent in November. It could be a prelude to even better news as it’s shaping up to be the best holiday retail shopping season in three years. Still, it’ll take lower unemployment and a hell of a lot more insider buying to save American Apparel. But if there’s one thing the company’s good at doing it’s defying expectations.

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Top five small-cap silver mining stocks

Here’s a short list of my favorite junior silver mining stocks that trade on major U.S. stock exchanges.

A recent poll on one of my favorite finance sites, www.financialsense.com, asked readers how high they see silver going in the next two years. The options?

  • Between $30 and $50 per oz.
  • Between $50 and $100 per oz.
  • Not sure – it depends on many factors
  • If we get deflation- silver prices may go lower
  • If the Fed keeps printing- well north of $100 per oz.

Readers there overwhelmingly voted for “between $50 and $100 per oz.” or “If the Fed keeps printing – well north of $100 per oz.”

If that’s really the case, the biggest beneficiaries will be small-cap silver mining stocks. Since, it’s a tough space to find stocks in without venturing onto expensive exchanges outside of the U.S., I thought I’d provide five silver stocks you can investigate further – all of which trade on major U.S. exchanges:

  1. Silvercorp Metals Inc. (NYSE:SVM), up 92 percent YTD; Market Cap: $2.1 billion
  2. Mag Silver Corp (AMEX:MVG), up 91 percent YTD; Market Cap: $631 million
  3. Endeavour Silver Corp. (AMEX:EXK), up 75 percent YTD; Market Cap: $449 million
  4. Alexco Resource Corp. (AMEX:AXU), up 104 percent YTD; Market Cap: $415 million
  5. Mines Management, Inc. (AMEX:MGN), up 11 percent YTD; Market Cap: $72 million

How to invest in uranium? With a uranium ETF, of course (URA)

By design or by luck, the brand new Global X Uranium ETF (NYSE:URA) hit the market at a supercharged time.

By design or by luck, the brand new Global X Uranium ETF (NYSE:URA) hit the market at a supercharged time. The ETF’s inception date is listed as Nov. 4, and investors hardly seemed to notice it in Friday’s trading. Then, Monday morning after a dramatic spike in the uranium spot prices, shares in URA rocketed up 11 percent, before tapering off 3.2 percent today.

The world wants green energy. Political changes in Washington seem sympathetic to nuclear power, the Fed’s quantitative easing program appears poised to push up commodities (including uranium) quickly and, perhaps most importantly, miners can’t produce enough uranium to keep up with market demands. Timing, then, could not be better for the launch of a uranium ETF, and URA is the first pure play for the metal. Designed to track the Solactive Global Uranium Index, URA is invested primarily in uranium mining and support companies around the world.

The ETF itself has pointed the spotlight on some small, speculative uranium mining plays that the funds count among its holding. They include Denison Mines Corp. (AMEX:DNN) and Uranium Energy Corp. (AMEX:UEC), two companies that are yet to report profits.

According to Investors.com: “The uranium spot price has averaged $45.50 a pound this year, about 25% lower than the 2008 average price of $62. Salman Partners mining analysts forecast an average price of $78 a pound in 2011, $104 in 2012 and $95 in 2013.”

Disclosure: I currently own shares of Uranium Energy Corp.

Tocqueville Gold Fund (TGLDX) moves higher on Morningstar’s list of top-performing mutual funds

The Tocqueville Gold Fund has edged out the PIMCO Real Estate Real Return Strategy A (PETAX) mutual fund for the No. 2 spot on Morningstar’s top mutual fund performers YTD. That puts it behind only the Dynamic Gold and Precious Metals I (DWGOX) mutual fund, another gold-focused fund that’s returned some 50 percent YTD.

The Tocqueville Gold Fund has edged out the PIMCO Real Estate Real Return Strategy A (PETAX) mutual fund for the No. 2 spot on Morningstar’s top mutual fund performers YTD. That puts it behind only the Dynamic Gold and Precious Metals I (DWGOX) mutual fund – another gold-focused fund that’s returned some 50 percent YTD. The Tocqueville Gold Fund has returned just shy of 36 percent YTD, and here’s a look at its Top 10 biggest holdings as of Aug. 31, 2010:

Holding % of Total Assets Ticker
Physical Gold 7.2% n/a
Osisko Mining Corporation 6.2% TSE:OSK
Randgold Resources Limited – ADR. 4.5% NASDAQ:GOLD
Ivanhoe Mines Ltd. 4.4% NYSE:IVN
Eldorado Gold Corp (pvt) 4.1% NYSE:EGO
Andean Resources 4.0% TSE:AND
IAMGOLD Corporation 3.8% NYSE:IAG
Silver Wheaton Corp (pvt) 3.6% NYSE:SLW
Newmont Mining Corporation 3.5% NYSE:NEM
Goldcorp, Inc. 2.9% NYSE:GG

Compare their holdings with Dynamic Gold and Precious Metals I (DWGOX) mutual fund, and you’ll see Tocqueville Gold Fund’s more conservative – although there are quite a few overlaps. Namely, both funds count the following stocks in their Top 10 holdings:

  • Osisko Mining Corporation (TSE:OSK)
  • Eldorado Gold Corp (NYSE:EGO)
  • Andean Resources (TSE:AND)

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Is there a bomb strapped to Taseko Mine’s (AMEX:TGB) chest?

I’ve long been a fan of Canadian gold mining company Taseko Mines Limited (AMEX:TGB). TGB’s trading at a P/E Ratio of 7.5 and the future at their massive Prosperity Mine appears bright. At least, it did until several Indian chiefs started a very vocal protest in the run-up to some necessary governmental approval for the mine. What exactly does the future hold for Taseko?

I’ve long been a fan of Canadian gold mining company Taseko Mines Limited (AMEX:TGB). TGB’s trading at a P/E Ratio of 7.5 and the future at their massive Prosperity Mine appears bright. At least, it did until several Indian chiefs started a very vocal protest in the run-up to some necessary governmental approval for the mine.

“At a news conference in Ottawa last week, (Xeni Gwet’in Chief Marilyn Baptiste) said she and members of her nation are willing to lay down their lives to protect Fish Lake, and suggested there could be confrontation,” according to the B.C. Local News.

The Department of Fisheries and Oceans, Transport Canada, and Natural Resources Canada have until Sept. 10 to weigh in on the mine with the Canadian Environmental Assessment Agency.

All told, 12 environmental groups have urged the agency to block construction at the Prosperity Mine. Not good. Taseko’s hung a big chunk of their future on Prosperity.

The mine could prove immensely profitable. Even after construction costs of $775 million, they expect their cost per ounce to be negative $330 (assuming gold prices of at least $900 per ounce)!

Expect an enormous pop in the stock if the Canadian government green lights the project. If they don’t? Well, I wouldn’t want to be holding TGB.

Lackluster day for gold stocks despite powerful market rally

Irrationality in the markets leaves gold stocks in the dust while driving up just about every other sector. The perfect short environment seems like it’s just around the corner.

The dollar dropped an average of roughly 1 percent against the Pound and the Euro. The Dow rallied 208 points (1.99 percent), and the FTSE was up 2.65 percent. What’s going on with gold? Despite an early surge on the New York NYMEX, the yellow metal spot price and corresponding stocks couldn’t keep pace with other equities. Here’s a handful of the most obvious underperformers in gold stocks:

  • Hecla Mining Company (NYSE:HL), +1.01 percent
  • Coeur d’Alene Mines Corporation (NYSE:CDE), +0.46 percent
  • Richmont Mines Inc. (AMEX:RIC), +2.12 percent
  • DRDGOLD Ltd. (NASDAQ:DROOY), +1.21 percent
  • Allied Nevada Gold Corp. (AMEX:ANV), +0.75 percent

The best performers were the international majors who are more tied to basic materials. Among them:

  • Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), +4.56 percent
  • Rio Tinto (NYSE:RTP), +5.26 percent

It appears better-than-expected earnings have created a micro-bubble, that could present some excellent short opportunities – particularly in the technology and basic materials stocks. In two weeks, earnings will taper off, and I expect reality to start setting in.

The ECRI, for instance, is pointing to a recession. Alan Greenspan’s calling for a double dip, and I’m try to free up capital and move into dividend stocks after my shorts blew up in my face today. I want to short at the top, and I think we’ll have that opportunity in the next two weeks – no matter what sector you’re in.