Why Palladium Stocks Are Set To Rise

With the recent volatility in the gold and silver markets

, having some portion of a portfolio devoted to platinum and palladium investing makes long-term sense in this current economic environment. While many economies around the world are slowing, with the recent push by central bankers around the world to stimulate their economies, this will have certain side effects that will benefit palladium investing.

The first is obvious; more liquidity means a push into commodities, such as gold, platinum, and palladium investing. However, another side effect were not currently seeing is the affordability of cars due to lower interest rates that have been engineered by the Federal Reserve. Data from last month blew away estimates, as the U.S. is on pace for close to 15 million vehicles sold for the year. And, as we all know, more cars mean increased use of catalytic converters, which, in turn, means higher demand for platinum and palladium investing.

There currently is a lack of junior mining companies specifically involved in palladium investing, as many extract multiple precious metals. One of the more interesting junior mining companies for those interested in palladium investing is Stillwater Mining Company (NYSE/SWC). This company extracts, processes, refines, and smelts a variety of precious metals, including palladium and platinum.

I previously discussed Stillwater when it was trading at $8.45. Now that it has gone up over 40%, the stock still appears to have more room to run. While the Relative Strength Index (RSI) is indicating a slightly overbought condition in early September, were currently seeing additional buyers step in to support the stock.

Junior mining companies are closely tied to the spot price of the commodity. As palladium investing goes on an upswing, so do the interconnected junior mining companies. Both the commodities and the stock price have broken their respective downward sloping resistance levels. Now that many junior mining companies like Stillwater are above their respective 200-day moving averages, additional support is highly possible over the next few months.

Junior mining companies are inherently risky, but they also provide a high level of potential reward. With the world central bankers pumping in additional liquidity, this will help fuel palladium investing, as well as spur car sales. In either situation, palladium investing and the junior mining companies associated with this industry should move up proportionately.

by: Penny Stock Detectives

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