The price of palladium (PALLADIUM) continues to show strength. It gained another 4.5 pct last week. It now becomes very interesting because we will find out very soon whether palladium will rise to $5000 in the next 12 months or not. Note this would be a 3-fold increase, it may become one of the top 3 investing opportunities of 2019, and would crush our palladium forecast for 2019.
Palladium is now trading 2 pct below all-time highs. More interestingly, palladium trades at a crucial level. If it rises, and remains above in the next few weeks.
We said earlier in one of our articles that in the very near term we are looking at how the price evolves in this intersection of the 2 areas outlined in below chart. How palladium behaves at $1300 and $1420 as well as $1440 will be crucial. We show more detail in the 2 charts below.
We also show on the 4-hour chart why March 1st, 2019 is a very important date and how it coincides with THE single most important price point on palladium’s chart.
As per our 100 investing tips:
Only a very limited number of price points have a decisive meaning. It is crucial to identify those critical price points, and actively use them in determining entry and exit points. Applied successfully and consistently it will deliver above average profits over time.
Palladium price: the big picture
Our investing thesis when it comes to palladium is very clear:
Because of the palladium to gold ratio. In the past, in 1999/2000, this ratio peaked at 4.3x. If this would happen again, say in 2019 and 2020, it would bring palladium to a peak of $5,000 before crashing back to “normal” levels.
Note that this is a possibility, it its not a given, that palladium will rise to $5,000. The probability might be low, but this is the type of opportunity investors do not want to miss!
Note that fundamentally it makes sense for the palladium price to rise because of the cost of production. As said in this article on Google the cost of production is around $1600/oz. So a substantial rise from here would essentially rebalance the economic situation, primarily price with production cost.
From the long term chart we can derive the price point that really matters, as well as the potential upside potential.
Visibly, it is all about the 2 channels inthe long term rising channel. If palladium is able to move from the lower band to the higher band it will likely rise to the top of the band which would be $2720 in some 12 months from now. That’s a 2-fold increase, and looks like the baseline scenario in case the breakout takes place.
Palladium investors watch the intraday chart, this is why
In our top down approach we look at the monthly chart first to determine the dominant trend and critical price points.
Next, it is the daily or even 4-hour chart that hones in on more precise decision points.
The 4-hour chart below has some crucial insights:
- By far the most important price point is $1420. It is where the tactical uptrend channel crosses the upper band.
- Moreover, on March 1st, 2019, support of the tactical channel crosses support of the upper band.
What this means is this: if the price of palladium continues to trade above $1,420 at a minimum 5 days after March 1st, 2019 it will likely confirm its breakout and its willingness to move to $2,700 in 12 months.
This is how you make long term and short term charts work together. It is also how we may know way ahead in time when a market may become ultra-bullish, and qualify as one of the TOP 3 investing opportunities in a year before Joe-comes-late-the-party jumps on the bandwagon.
How to play the palladium uptrend? Very simple, there are 2 options to get expsoure to palladium: one solution is to buy PALL ETF (easy but not always the liquidity you need so high risk), the other solution is to open an account with GoldMoney and buy/store physical palladium for you in a couple of simple steps. GoldMoney is one of the few online precious metals services that offers palladium.
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