The recent drop in the palladium price was partly caused by Russia holding onto its palladium supply. This fact, along with the probable exhaustion of Russia’s palladium supply will narrow the gap that now exists between palladium and its sister metal platinum. There is no reason for the huge price difference that exists between the two metals, as they are usually mined together. Currently, platinum is about two and one half more expensive than palladium.

Palladium is used to make jewelry, electronics, dentistry products, and surgical instruments. However, palladium is best known for its use in catalytic converters. Car sales are strong, especially in emerging markets. This means many catalytic converters are needed. Palladium has replaced platinum as the main metal used in gasoline catalytic converters.

The main metal used to produce diesel converters is still platinum. However, advances in technology have made it possible to reduce the amount of platinum used by adding palladium. As the technology continues the amount of palladium used will increase more. This will increase demand. This means palladium prices should increase in the future.

It is thought that platinum’s price will also surge upward, and overtake gold again. It is going to take several years but the gap between the two metals should narrow, especially if palladium demand continues to outstrip demand which is probable. A lot depends if China can keep auto production up and if countries like India keep buying. There is no reason to think this will change, because emerging markets now make up over 50 percent of all car sales.

Once Russia is no longer counted on as a supplier of palladium is when the supplies will really tighten up. This should be happening soon. It is difficult to predict when Russia’s stockpiles will be completely depleted because nobody knows what their supply is. Yet, once Russia is out of the picture the price of palladium should pick up, especially if car production continues its current upward trend.

Finally, the recent drop in the price of palladium was caused by Russia holding on to its supply. However, it is thought Russia’s supply of palladium is nearly depleted. This will cause palladium to rise in price. Over the next few years the price gap between palladium and platinum should significantly narrow. Since these two metals are mined together there is no rationale for platinum to be over two more times as expensive as palladium.