And palladium could see another break-out in price before year end. Here’s why…
by Greg Guenthner via Daily Reckoning
Here’s the Best Metals Play on the Market
After riding a seven-day winning streak, the Dow Jones Industrial Average finally cracked.
Stocks endured heavy selling across the board Thursday morning. By lunch, all the major averages were down by at least 1%. The horror!
But you can’t keep this market down for long. The major averages recouped some of their losses by the closing bell. When the dust cleared, the Dow finished the day down just 101 points. To put this move in perspective, that’s a loss of less than half a percent.
But traders are already starting to get skittish. Volatility has been so low this year that a run-of-the-mill dip like we experienced yesterday feels like a crash. Futures are already sneaking lower this morning. Maybe we’ll see some actual market volatility to finish the trading week.
Naturally, we would expect some safety trades to turn higher during a bout of market weakness. But as S&P futures sink into the red this morning, precious metals are going nowhere.
Gold hasn’t generated any positive momentum ever since it topped $1,350 back in September. The Midas metal has slipped to $1,285 this week— a far cry from its 2017 highs set just two months ago. Silver isn’t looking any better. It’s traded in a choppy range for most of 2017, posting year-to-date gains of just about 6%.
We spent some time stalking the metals comeback during the first three months of the year. After rocketing out of the gate in January, the Midas metal hit the skids in March, prompting traders to abandon ship as precious metals endured their first correction of the young year. Gold picked up the pace in the summer when the dollar hit the skids. But it hasn’t managed to hang onto its gains, leaving us with few opportunities to play it on the long side.
Most armchair investors can rattle off gold, silver, and platinum when it’s time to talk precious metals. But there’s another member of this elite club folks tend to forget that also feels right at home with its industrial metal counterparts. And unlike gold and silver, this metal is streaking to new 16-year highs this week…
I’m talking about palladium.
Palladium is ripping higher thanks to its industrial applications. It’s used in catalytic converters in cars and trucks, as well as capacitors in consumer electronic equipment.
Most investors aren’t paying a lick of attention to palladium right now. Yet this forgotten precious metal is beating the pants off the major averages this year…
Gold has posted a respectable gain of almost 12% so far this year. The S&P has gained more than 15% in 2017. Meanwhile, palladium’s spot price has rocketed 47% year-to-date. Those are some serious gains that could even keep pace with the furious FANGs this year…
While palladium just jumped to prices we haven’t seen since the earliest days of this century, the action we’re seeing now is giving traders a solid entry point. Palladium is pulling back in an orderly fashion to wind down the trading week. You won’t have to chase a big rip higher today to get in on this play. Instead, we can buy a small dip to establish a new position in our palladium play.
As the palladium bull rages on, we could see an even bigger breakout before the end of the year. It’s the best metals play on the market today…