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The One Commodity Chart Every Investor Needs To See

 May 25, 2012 11:33 AM
 


(By Street Authority) A little more than 10 years ago, when the market was fixated on high-flying tech stocks like Oracle (Nasdaq: ORCL) and Yahoo (Nasdaq: YHOO), a few savvy commodity investors were making a fortune on a certain industrial metal.

[Related -Yahoo! Inc. (YHOO) Q4 Earnings Preview: More January Blues?]

During that time, orders for this metal were so strong, that all the mining production in the world couldn't keep pace with demand... 

To cover the shortfall, buyers had to dip into reserve stockpiles in Russia.

All this drove prices for this metal skyward. Between January 2000 and February 2001, spot market prices surged 157% -- from $430 an ounce to $1100 in a matter of months.

Why do I bring this up? Because not much has changed in the past decade, and I'm seeing a similar situation play out in the market that could send this metal -- palladium -- soaring again.

[Related -Fusion-IO, Inc. (FIO): Can Fusion-IO Q2 Results Cheer Street?]

Here's the story...

Palladium is an extremely important metal. In fact, I would say it's indispensable for the global economy

The metal has a multitude of uses, most notably in the dental, jewelry and electronics fields. But demand from the auto sector is greater than all of those combined. 

You see, palladium belongs to the platinum metals group, or PGMs. PGMs are the agent in catalytic converters that turn vehicle exhaust into harmless water vapor. Without these devices, internal combustion engines would spew out tons of noxious pollutants. Despite decades of research, carmakers have never found a viable substitute.

But what really makes palladium unique is that it's becoming exceedingly rare.

Annual production rates are usually less than one-tenth that of gold.


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