Before this Monday, I had never traded anything to do with palladium in my entire life. However, over the weekend I decided this laggard metal was worth a shot, so I started buying on Monday.
I am ashamed to say that yesterday morning, when PALL was slipping lower, I was briefly tempted to dump it and be done with it, but I looked at the charts more and decided not only was I not going to dump it, but I was going to push deep into margin and buy a lot more. Well, thank God for that…………it blasted higher yesterday, eased back all night long, and then went into blast-off mode again.
Now, I confess that I got kind of carried away and as of this morning had an absurdly leveraged position, but the good news for me is that this morning along I added 20% value to my overall account in just twenty-four hours. I decided that enough was enough, I was getting crazy, so I dialed back to only about 143% committed as opposed to almost 300%. To be sure, I’m still excited about the future of PALL, but I decided to at least take some profits since I had pushed risk way too far.
The thing is, platinum was kind of in the same boat about a month ago, since it was just kind of grinding around and doing nothing for month after month, even though gold was doing fantastic. Then, out of the blue, all that pent-up energy got released and /PL went roaring higher.
Therefore, gold, silver, and platinum were all having a great time at the party, but poor old palladium was left out in the cold. It only seems to have come to life this week, so my timing may turn out to have been good.
As we look at PALL, which is the instrument I’m using for this trade, we can see how volume has pumped up nicely over the past month. This, coupled with the price strength, is encouraging.
Lastly, the chart of palladium versus the US dollar is compelling. Not only are we basing nicely, but the distance between these various bases is roughly the same (about eight years).
The bottom line: I’m still very long palladium, but I’ve trimmed my position to less insane levels for the sake of my desire to sleep at night. As I prepare to send this post out, gold futures are up 0% while palladium futures are up 7%. That’s a nice catch-up!
