Recent volatility in the precious metals sector has had many investors ready to throw in the towel. With gold and silver back at levels matching late 2011 and early 2012, it’s no wonder.
Palladium however has seemed to be a bright spot in the market that has so many shaking in their boots at the moment. As always, when something is going on with palladium we tap our number one resource on the subject, Michael Rothman of the Rothman Group.
Mr. Rothman’s stance on palladium could not have a firmer ground.
When asked why he was so bullish on this mystery metal to most, his answer was intriguing.
” We’ve had a major scare in the oil markets with Iran threatening to choke the throat of the oil industry coming out of the middle east, but for the last three to four weeks, no rhetoric has been heard, and oil has been dropping. It does make me wonder what kind of deal has been struck between Iran, the Saudi’s and Obama to allow this lack of “action” to take place. But the fallout I see from it only strengthen’s my views. With oil dropping, and keeping $4 gas away from American consumers gas tanks, it is similar to getting a $3 trillion tax cut on fuel. Cheaper gas, and the smoke and mirrors of a recovering economy, will give those Americans that believe everything is ok enough reasoning to buy that new car they have been putting off for some time now.
Initially, palladium was back on my radar due to the age of the fleets on our roads today. This is stemming from 2008, when companies that were due to upgrade their fleet vehicles “kicked the can down the road” because of the uncertainty caused by the crash that year. At this point the fleet age is higher than it has ever been between 8-10 years, or 10-12 years, depending on who you ask. When a cost benefit analysis is done for these companies, a new fleet will now win, regardless of what the economy is doing.
Combine those points with manufacturer’s not taking time off this summer, which they normally do, with the exception of Ford who is taking only 1 week off instead of the standard 2, and you have many more cars that use palladium being made. The dealers themselves have also been running on a “just in time inventory” lately due to the prices and volatility of commodities, and they sold all of there inventory in April based on the record numbers that have been reported. That inventory has to be replaced.
All of this along with the middle class of China and India continuing to grow and buying first and second vehicles is a cherry on top.”
May 18th, 2012 
Iron Man 
