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How do I Buy Palladium?

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  • Written By: Bobby R. Goldsmith
  • Edited By: Susan Barwick
  • Last Modified Date: 13 November 2016
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    Conjecture Corporation
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With the rising spot price in precious metals, many investors are investigating how to buy palladium, along with gold and silver. Buying palladium is a straightforward process, but one that requires the investor to undertake several preparatory steps. An investor needs to understand what palladium is — as an investment commodity — in relation to its bullion value. The investor must then find a precious metals dealer that trades in high end metals, while learning about the strike price, the spot price, exchange differentials and what percentage a dealer expects on transactions. An investor seeking to buy palladium is making an investment of time as well as wealth.

Palladium is a precious metal that possesses what investors call a bullion value. Unlike paper currency or stocks and bonds, items that possess a bullion value are said to carry an inherent value based upon the item's utility. For example, while a stock certificate is only worth the value of its listed shares multiplied by the price per share on the stock index, an ounce of palladium is useful as a metal as well as for its trade price. Precious metal investors store their wealth in bullion because, in a weak economy, potential buyers will remain interested. For investors who plan to buy palladium, there is an additional value in the high spot price per ounce, a feature that allows investors to consolidate a high amount of wealth into a compact amount of tangible metal.

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The value of bullion rests in the industrial versatility of the metal. Palladium is an essential component in a variety of products, most notably in catalytic converters for automobiles, capacitors for top-grade electronic components, hydrogen cell technology, photography and jewelry. Its utility provides two methods for investors to buy palladium. There are a number of metal dealers across the globe, but due to the relatively high price point of palladium, only a fraction of those dealers trade in that particular metal. Generally, there is a market in some countries for second-hand palladium, but investors must be wary of this, for second-hand sources are much more difficult to verify.

Investors seeking to buy palladium must also understand how the strike price and the spot price of precious metals works. Precious metals are traded on several worldwide markets, and due to this activity, a general price per troy ounce is determined. That value is the spot price. The strike price is one of two things. It can be the price that a dealer or broker charges the investor, which is the spot price plus service, handling and other fees, or the price that a dealer will pay an individual selling the metal, usually a rate quite a bit lower than the spot price.

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