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Palladium, the Now Metal

16 february 2009

There emerged a new brand on the jewelry market, according to the Business FM radio station. World manufacturers are going to have a dig at promoting palladium. Their PR campaign is sustained by five metallurgic concerns from South Africa, the United States and Russia.

Palladium is the closest relative of precious platinum and the Earth’s crust contains palladium twice as much compared to gold but palladium output is 10 times less. Palladium is a white metal and it is harder and stronger than gold. Andrey Ananov, President of Russkoye Yuvelirnoye Iskusstvo, believes that “palladium is undoubtedly a precious metal very suitable for jewelry production. It has a beautiful white color, easily processed, etc. Indeed it is undervalued now as was in the pre-revolutionary period and its use is limited. It doesn’t deserve it. This is why this metal has a promising future.”

The Chinese were the first to notice unique qualities of palladium, Business FM says. It was China which three years ago turned into a major consumer of palladium for jewelry purposes. Now palladium consumption amounts to 250 tons a year. Palladium is mainly produced by three South African companies, Anglo Platinum, Impala Platinum and Lonmil, U.S. Stillwater Mining Company and Russian NorNickel. They account for 90 percent of the world’s palladium output. However, this metal is mostly used in the automotive industry. This is what has been told to Business FM by Anton Berlin, Chief of Market Analysis and Development for NorNickel: “Palladium is actually an industrial metal and is used in technical fields. Although its jewelry consumption has increased in recent years, still it is less compared to automobile catalytic converters. Our palladium sales are mainly targeted at consumers and we sell it to a whole range of countries, we sell it in America, Europe, Asia and Russia.”

One of the undisputable advantages of palladium, Business FM stressed, is that it is four times cheaper than gold. However, Russia being the source of one half of the world’s palladium output could significantly raise its price quotations. To do this it would be enough to close exports. According to experts, in this case palladium prices will go up to $500 per ounce. Some analysts believe that this noble metal could even reach the $1000 mark per ounce. However, this will be possible only on condition it will win the jewelry market, says Halil Shehmametyev, Analytic Director of the Otkrytie Financial Corporation: “From my point of view, it is so far early to expect that it will cost $1000 per ounce. We have to take into account that palladium is rather difficult to process as a metal. Of course it has some advantages, but these are mainly demanded for industrial purposes, not in the jewelry manufacturing.”

The five world manufacturers will promote palladium to public along the advertising pattern of platinum. Thirty years ago, the latter was also banned from the fine jewelry world, but the South African metal-makers managed to bring the consumer around. Palladium gives jewelers an opportunity to incarnate off-beat design solutions impossible to be rendered in gold. For instance, a carcanet should not weigh more than 200 grams, otherwise it would be inconvenient to wear it. Gold does not permit to make massive jewelry pieces. Palladium due to it lightness and strength permits to make fine and open-work jewelry pieces very voluminous. Besides, a gem is held much firmly in place by a palladium setting. In such a case an accessory made of palladium will be one and a half times lighter than a similar thing made of gold.

Last December, Moscow held the Global Luxury Forum, a conference which discussed the problems of luxury and de luxe goods. According to Glomu.ru, a Russian social gossip portal, jewelry companies presented their first palladium pieces at this forum. Asya Webster, a spokeswoman for the Stephen Webster Jewelry House, said that items made of this metal are easy to wear due to their light weight. Ms. Webster also did not exclude a possibility that in the nearest time there would be made a collection including palladium jewelry pieces, but so far it is off the question – there is only a unique brooch made of this material.

Palladium is the most promising precious metal in the long term due to its being fundamentally undervalued, believes Paul Waker, CEO of GFMS, the world’s premiere consulting agency in the field of precious metals. He told this to PRIME-TASS on the sidelines of the Global Luxury Forum. According to him, a considerable part of negative trends related to crimpled demand has already been offset by the market and actually palladium has nowhere to go further down in price (as quoted in London on 12.30.08 , its price was $178 per ounce vs more than $600 last March). “The year 2009 will not be simple – palladium quotations will be under pressure due to economic problems, but in the long run this metal looks more preferable,” he said.

Along with the global recession, the main problem with promoting palladium to the jewelry field is actually the absence of a sufficient amount of jewelry made of this metal, which is in particular was confirmed by Asya Webster. As reported by National Jeweler, the Palladium Alliance International (PAI) and the DJS Marketing Group hired by it have suspended the advertising campaign which was due to start last autumn.

According to DJS President Deborah Scarpa, “we're very aware of the economic times and felt we were better holding off on the launch to focus on the building up of product, so it wouldn't be frustrating for consumers [hoping] to find palladium in stores.”

To do so, PAI is trying to make its presence better known on the trade circuit and is contacting both key and new manufacturers, with the consumer campaign set to launch online next fall.  Scarpa says that especially with palladium's positioning as the "now metal," a strong online presence is crucial.