Commodities and precious metals had particularly strong years, with palladium at the top of the heap. Some drivers behind the near doubling of palladium prices in 2010:
- An exchange traded fund linked to the metal launched in New York in January, granting much easier access for retail and institutional investment and therefore a big new buyer in a relatively small market. Global ETFs now hold over 2 million ounces of palladium, while annual mine supply is just 6 million ounces.
- Palladium is a key component in cars’ catalytic convertors, and the global auto industry rebounded strongly in 2010, especially in emerging markets. Here’s a full list of palladium applications.
- The Russian government accumulated a vast stockpile of palladium in the middle of the last century and for the past two decades has been selling about a million ounces a year. Now there’s speculation that Russia has little left, so supply will get tighter.
- General demand for precious metals grew last year as ongoing deficit spending in the U.S. raised inflationary concerns and the dollar remained weak.