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Trader Sees a 'Sleeper' Bet on This Metal

Thursday, 27 Dec 2012 | 1:34 PM ET
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Increasing demand in the auto industry is leading some traders to place bets on one of the less familiar precious metals: palladium.

"It is my sleeper bet for 2013," said Dan Dicker in an interview on CNBC's "Squawk Box." "It's a real industrial metal. It's in very short supply. It's had a very steady run. It's under-traded, under-owned and one of those industrial metals. It's one of those sleeper metal plays that you can make."

Buy These Metals For Long Term Plays: Pro
Jeffrey Christian, Founder & Managing Director, CPM Group says that as global demand for cars continue to rise, platinum and palladium are good long term plays, given their industrial use.

Palladium is an offshoot of the platinum family of metals and is largely used in automobile catalytic converters. It also is used in advanced electronics and some types of fuel cells.There is also occasional use of it in jewelry.

The auto industry has seen a significant gain in sales over the last year. That has led to speculation that production will increase and drive demand for industrial palladium.

"Long term we like platinum and palladium," said Jeffrey Christian, Founder & Managing Director, CPM Group, in an appearance on CNBC World. "These are commodities that are used in every car manufactured and sold in the world and auto sales on a global basis are at record levels and it's going to continue to be that way.

But he had a caution.

"They are also commodities that are heavily dependent on South Africa and a handful of mining companies in South Africa and are faced with enormous concerns in growing production and even maintaining production," he noted. "So on a long term perspective we like platinum-palladium but on a short term perspective they are just as vulnerable as other commodities to an investor unwind...you've got a lot of investors who are revisiting the concept of being long commodities."

One North American palladium producer, North American Palladium, trades on the NYSE. An exchange traded fund, PALL, also trades on the exchange.

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