Investments in Commodities through Palladium Companies - dummies

Investments in Commodities through Palladium Companies

By Amine Bouchentouf

One of the best — albeit indirect — methods of getting exposure to the commodities markets in palladium is investing in companies that mine the metal. A number of companies specialize in this activity, but take a look at these two:

  • North American Palladium (AMEX: PAL): North American Palladium, headquartered in Toronto, has a significant presence in the Canadian palladium ore–mining business. It’s the largest producer of palladium in Canada, with production in 2005 totaling almost 200,000 ounces. North American palladium is your entry into the lucrative Canadian palladium-mining sector.

  • Stillwater Mining Company (NYSE: SWC): Stillwater Mining, based in Montana, is the largest producer of palladium outside South Africa and Russia. Although it’s involved in platinum and other PGM, its primary mining output is palladium. It produces approximately 500,000 ounces of palladium a year, primarily through North American mines.

Although these are the two largest companies that trade publicly on American exchanges, several international companies have significantly larger palladium-mining activities. Just make sure you’re aware of the many regulatory differences between American and overseas markets before you invest in companies that trade in overseas stock markets.

You may also want to consider a couple international palladium companies:

  • Anglo Platinum Group (South Africa): As its name suggests, Anglo Platinum Group invests in platinum group metals, but it’s also one of the largest producers of palladium in the world. The company produced more than 2.5 million ounces of palladium in 2005 and is estimated to have reserves of more than 200 million ounces (this includes other PGM).

    With its operations located primarily in South Africa, Anglo Platinum Group is your gateway to South African palladium. Its shares are traded in the Johannesburg Stock Exchange (JSE) and the London Stock Exchange (LSE).

  • Norilsk Nickel (Russia): Norilsk Nickel may not be a household name, but it’s the largest producer of palladium in the world. It dominates the Russian palladium industry, which is the largest in the world. Beyond its large palladium-mining activities, the company is a major player in copper and nickel ore mining. The company’s shares are available through the Moscow Inter-bank Currency Exchange (MICEX).

If you’re comfortable in the futures markets, the Chicago Mercantile Exchange (CME) offers a futures contract that tracks palladium. This contract represents 100 troy ounces of palladium and trades both electronically and during the open outcry session. It trades under the symbol PA.