With World Stocks up 20% YTD, it might be surprising to know it’s not even the best performing asset on the year? For that designation, we turn to a commodity. No, not gold or crude oil, but palladium.  Not sure what palladium is? At one point, the metal was used most commonly in catalytic converters to filter car emissions. But people are up close and personal with the metal a lot more these days – thanks to it being one of the metals commonly used in cell phone production. That’s right – that stuff in your phone is up roughly 35% for the year. If we look at the big picture, the metal is hitting a 16-year high:

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

palladium
Right on cue, managed futures programs and other speculators (see them all here), are hopping on the Palladium long trend in big numbers via the WSJ:

Palladium WSJ

Another interesting part of this move, its put palladium ahead of platinum in price for the first time since 2001.

The two metals are typically not traded as much as Gold or Silver, but Platinum and Palladium are somewhat interchangeable in their use cases. So why a big move in Palladium and not Platinum if they can be sometimes interchanged? Bloomberg links the rise in military escalation due to North Korea as a possible reason:

Why should palladium’s price be affected by the threats from North Korea, and potential military escalations in Afghanistan and the Middle East? Palladium plating is often selected over gold due to its high melting point and lower cost, for various types of connector applications used in defense manufacturing processes. Defense plating processes are used to protect military parts including detonators, avionics, missile components and aircraft engine parts, and offer such benefits as corrosion and heat resistance, electrical conductivity, and compliance with military specifications.

Finally, hydrocarbons are increasingly becoming a vital energy source by the military both in the U.S. and elsewhere, and palladium-based nanomaterials play a significant role in hydrogen purification, storage, detection, and fuel cells.

So how do you get access to moves like this?  Follow Jim Cramer?  Some commodity/military/auto parts blog?  No, most everyone who is exposed to this move has that exposure thanks to a trend following type portfolio of global markets, which monitors dozens of markets waiting for a momentum breakout like this one to occur in any one market or sector. They make sure they are involved in every breakout, across markets and sectors, including the false breakouts – to ensure that they are part of the real breakouts when they happen. That’s why a lack of volatility (or breakouts) hurts that type of strategy, and why they can participate in a move like Palladium without knowing the first thing about catalytic converters or melting points.

So go ahead and do your thing Palladium…. Some of us are watching.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, RCM's own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Article by RCM Alternatives

Tags: