MRP added Long Palladium as a theme on October 9, 2017, on the basis that improving demand and supply fundamentals were setting the stage for a multi-year supply deficit that would push the metal’s price higher. But, after delivering the best return among major raw materials in 2017, palladium has struggled this year. Palladium’s spot price and the palladium ETF (PALL), which we are using to track the theme, are both down about 10% year-to-date, with several ups and downs between the beginning of the year and today. Overall, the theme is up 6% since the October 9 launch, although in mid-January it was about up almost 20%. The decline is largely due to external macro factors rather than fundamental issues.

While there were concerns at the beginning of 2018 that last year’s 55% surge had sent prices up too fast, much of the volatility we’ve been seeing this year has had to do with headlines related to US trade and sanctions policies, as well as technicalities in the trading market . . .

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